BidonThis Blog - Charges for Credit Card Payments.
We’re taking Credit Card Payments for Auctions at no cost – how are you dealing with the legislation change?
On 13th January the law changed so business’ must charge the same to buyers via any payment method. This means that surcharges for debit and credit cards can no longer be taken – whether you are a shop, a hairdresser, a small online retailer, or Amazon! The problem is business’ still have to pay the banks a fee, and they can’t charge the customer for the privilege of using a card. So - if you go into your local shop without money and pay for a can of coke at 90p, the shopkeeper can no longer charge you 30p, despite being charged it by the banks.
Without waxing lyrical about the short-sightedness of how this blanket legislation will impact small business’ – something I’ve already done at length to my MP, the option that companies are left with are:-
- A. Continue to take payment and increase your costs
- B. Continue to take payment and increase your prices generally to cover costs
- C. Refuse to take card payments.
For a lot of retailers, especially the large ones, my prediction is option B. will occur. Where you control your goods/service price point, you can probably make it up. For example RyanAir, who have been criticised extensively in the past, always have the option to put up their flight prices to cover the cost. However, in the auction house industry, where margins are tight - the goods are generally not owned by the Auction House, so the price is not under their control. The debate about what to do has been vociferous.
Most auction houses accept the costs on debit cards because it is relatively low, but on credit cards there is a serious issue. One auction house reported that they took £60,000 on credit cards in one sale – even taking a low card rate of 1.2% - that is a £720 cost per sale that didn’t previously exist. This means a large number of auction houses have decided not to take credit card payments in house. Others are taking card payments on low value and refusing for higher. Sadly this means both an increase in time taken to get the funds, as buyers will have to be persuaded to do a manual bank transfer and admin costs will increase as bank checks have to be done, or buyers that can only pay on credit card won’t be able to purchase.
What about online? Here at BidonThis we are in the same position as the auction houses. We are the only site that takes the payment as the hammer drops AND takes the risk on those payments – passing the monies made onto the auction house the next day via bank transfer. Our competitors who do offer online payment appear to be passing that back to the auction house when credit cards are being used.
I started BidonThis with the single goal to help Auction Houses to grow and expand their auction sales by offering a faster, easier lower cost alternative whilst also bringing the world of auction sales to a growing buyer market at a lower price of 1.5%. This legislation does not help us or anyone in the auction world. But we cannot see a way to achieve our goals without maintaining the low fee and the option of credit card payment – since it matters so much to so many dealers and traders. So, we have taken the decision to take on the cost ourselves as a few auction houses have done. We are dedicated to the plan and hope that it means that auction houses who can’t do this themselves can direct people online and our clients, both auction houses and customers don’t get penalised.