A new EU directive, the Second Payment Services Directive or PSD2, comes into force on January 13, 2018, making it illegal for businesses to charge extra to customers paying via debit or credit card.
Lorence Nye, policy adviser for the Federation of Small Businesses, said that an end to retailers and wholesalers being permitted to pass on the costs of card transactions will hit small businesses hard: their size and lack of bargaining power mean they already tend to be charged disproportionately by card providers.
“We are concerned about the ban on card charges,” he told ATG. “The change has not been well publicised and will come as a surprise to many people next year.”
ATG has learned that in response to PSD2, some auctioneers are considering increasing buyer’s premium, but at the same time offering a discount to customers willing to pay by bank transfer.
“We are considering a number of options,” said Simon Chislett, finance director at Mallams. “We don’t want to put up the premium, though we haven’t completely ruled that out. It will be a last resort and would probably be linked with a discount for bank transfer.”
Greg Bateman, managing director of Batemans, said the Stamford auctioneer would “absorb these charges initially and see how badly it affects us”.
He added: “Having worried about it for some time, our most likely solution will be to increase buyer’s premium.
“We have been considering this for a while at any rate, as the prices of the many supplementary services we use in running the auctions are increasing as well.”
- Bank transfers are not affected (and are popular in the antiques trade for their lack of acquisition costs and immunity to chargebacks) so their use will probably increase, especially for larger-value items.
- Customers may be wedded to the convenience and enhanced protection of credit cards, and refusing to accept them at all is not a practical proposition.
- One small crumb of comfort is that, under PSD2, the practice of setting a maximum transaction value for credit cards will be allowed to continue – so although it puts some buyers off, this will likely continue to be the ‘least worst’ option for many dealers and auction houses. SOFAA council member Jeremy Lamond said this is increasingly the practice by auctioneers, where the card holder is not present.
Additional reporting by Andrew Saunders.
For more on credit cards, see our feature on chargebacks in this issue.