How Much Does it Cost Businesses to Accept Cash Payments?

handful of coins

You may not have thought about it much but, for businesses, accepting payments in cash is not free.

That’s right. There’s a lot of talk about the cost to businesses of taking debit and credit card payments, but not so much about accepting bits of metal and paper instead.

Accepting cash involves a lot of costs, some more obvious than others.

First, businesses typically have to pay to deposit cash with their bank. Here’s a quick look at the fees that banks charge small businesses for doing this:

  • NatWest’s standard tariff: 70p per £100
  • Lloyds: £1 per £100 or 80p per £100 over £1500 per month
  • Royal Bank of Scotland: 70p per £100
  • Barclays Business Current Account – Mixed Payments Plan: 90p per £100

Then there are other costs of handling cash. These include:

  • Theft by staff
  • Time spent counting cash
  • Keeping enough change
  • Physical security
  • Transporting cash to the bank

When all these costs are taken into account, accepting a cash payment can easily cost a small business, on average, 1% or more of the value of that payment. It can conceivably be more expensive for a businesses than accepting a debit or credit card payment.

What do you think? Is cash secretly a rather expensive way to accept payments?

Credit Card Surcharge Ban: Is It Making Things Worse for Consumers?

sunflower with sad face

The new ban on credit card surcharges was supposed to make things better for consumers. In practice, it could be making things worse. Here’s why.

What’s the background to this?

On 13th January 2018 it becomes illegal to charge consumers extra for paying by credit card (or any other consumer payment method).

The idea, presumably, was to make life simpler for consumers by outlawing the annoying ‘surprise’ fees that would get added on just before you completed a purchase online. Also, arguably, it would make things simpler as people wouldn’t have to factor annoying fees into their decision about how to pay.

How could the ban lead to higher prices?

Without the income they were receiving from credit card surcharges, companies will, in the long run, need to recoup that income some other way. So they’ll inevitably put up headline prices to compensate (or introduce new charges). Any savings consumers will enjoy in not paying credit card surcharges will be converted into higher prices for everyone (regardless of how they pay).

As well as this, credit card surcharges have historically deterred some consumers from paying by credit card in at least some cases. The ban will mean businesses can’t charge customers more for using credit cards, so that deterrent will go away. And presumably some purchases will, as a result, shift from cheaper payment methods to credit cards.

Assuming it costs businesses more to process credit card payments than other payments, a shift to more payments being made by credit card will mean an increase in over all payment processing fees for all the competitors in each industry. And that will ultimately end up getting passed on to the consumers in yet higher prices.

So the net result for consumers? Higher prices over all (even after taking the saving on surcharges into account). Not good.

Could the ban be bad for consumers in other ways?


It’s possible that, with the ban, some organisations will decide it doesn’t make sense any longer for them to accept some more expensive forms of payment and will simply stop doing so or introduce a minimum spend for using cards. Indeed, HMRC have already said they’re going to stop taking self-assessment tax payments by credit card from 13 January 2018. And the Iglu travel company will only be accepting bank transfers for many payments.

So another outcome may be that consumers end up with fewer ways to pay. In particular, they may lose protections they’d otherwise get by making purchases by credit card and the flexibility of paying on credit. Again, a poor outcome for consumers.

What are we seeing in practice?

We’re already seeing companies finding (very unpopular!) ways around the ban.

Some companies are following the spirit of the new regulation and, in some cases, are even trying to get some positive coverage for doing so.

It’s still early days, so it’s too early to know exactly what will happen.

What do you think?

And how are you seeing companies respond to the ban?

Credit Card Surcharge Ban: The Companies That are Absorbing the Cost Themselves

hand holding sword aloft

With surcharges for credit and debit card payments being banned in the UK from 13th July 2018, lots of companies are considering introducing new fees or otherwise getting around the ban.

Meanwhile, some companies are using this as an opportunity to ‘do the right thing’ by their customers by simply absorbing the payment processing costs themselves.

Here are the customer-friendly companies we’ve heard about so far (do let us know in the comments if you know of others!)

  • FOODit — an online restaurant booking platform. In a way, FOODit compete with Just Eat who, in contrast, have faced a big backlash over their introduction of a 50p ‘service charge’ on all orders.
  • OK… there must be more… surely…?!


These Companies Are Getting Around the Ban on Credit Card Surcharges (Here’s How)

credit card

As we mentioned earlier, since 13th January 2018, UK businesses are no longer be allowed to charge extra for paying by credit card or debit card.

Inevitably, some businesses have found ways around this.

Here are the ones we’ve heard about so far. (Let us know if you’ve heard about others.)

Just Eat

The popular take away ordering and delivery service made themselves distinctly unpopular by announcing that they’re replacing their 50p credit card surcharge with a 50p ‘service charge’ that will apply to all orders (even those where customers are paying cash on delivery).

Indigo Parking

This parking company have replaced their credit card surcharge with a ‘convenience fee’:

Swansea City Football Club

Since 3rd January, Swansea City have begun charging fans booking fees of £2.50 per ticket for tickets bought in person or via the phone and £1.60 for tickets purchased online.


As reported by The Independent, Online travel agent Iglu was originally going to charge customers a whopping £25 booking fee for booking by card (it’s not clear why they thought this would be okay). They later changed their minds and now, apparently, are going to remove the credit card payment option in a lot of cases. Instead, customers will have to pay by bank transfer.

Unicorn Cinema, Abingdon

According to local taxi driver, Colin, the Unicorn Cinema in Abingdon have replaced their £1.60 credit/debit card processing fee with a booking fee that, according to the cinema’s latest terms and conditions, is “in consideration of providing the online booking facility”.

(Note: we love independent cinemas and we know they face an uphill struggle to exist at all, so go easy on them!)


Ban on Credit Card Surcharges from 13th Jan 2018: All You Need to Know

Person paying by credit card

From Saturday 13th January 2018, it will be illegal for a UK businesses to charge someone extra for paying with a consumer debit card or credit card.

Does this apply to all credit and debit cards?

It applies to all ‘retail payment instruments’, including consumer cards of all flavours. For example:

  • Visa and Mastercard debit cards
  • Visa and Mastercard credit cards
  • American Express cards
  • Diners Club cards
  • Apple Pay
  • Android Pay
  • PayPal

Companies will be allowed to charge extra, however, for paying with commercial debit and credit cards. In those cases, though, they’ll only be allowed to charge enough to cover the costs they incur for using that payment method.

Will it affect payments to councils and public bodies?

Yes, the new rules apply to local councils and public bodies, too.

Does it apply online and offline?

Yes, the rule will apply everywhere in the UK, whether you’re buying a pint of milk at your local corner shop or buying your next TV on

Where has this rule come from?

The new rules are UK law to implement a new regulation agreed at the EU level called ‘PSD2’ (the second Payment Services Directive). Each country can choose exactly how it will implement PSD2. The UK has chosen to go further than specifically required by PSD2 by applying the rule to ‘all retail payment instruments’ rather than just credit and debit cards.

What’s going to happen in practice?

There is lots of speculation about how UK retailers are going to respond to this.

Many people expect retailers to simply increase prices or introduce extra fees in place of the debit and credit card surcharges that are going away. JustEat have already removed their card payment surcharge and introduced a 50p ‘service charge’ in its place. Predictably, customers and the press have been up in arms about it.

At the same time, it’s likely that many smaller retailers won’t have got the message just yet and will illegally continue to charge fees after the deadline. We expect savvy customers to set them straight fairly quickly.

Some organisations will stop accepting credit and debit card payments altogether. HMRC, for example, have announced that, from 13th January 2018, they’ll no longer be allowing people to pay their self-assessment tax bills by credit card. Likewise, online travel agent Iglu will be restricting most customers to paying by bank transfer.

Another option for businesses will be to have a minimum spend for paying by card. It’s something that used to be popular in the past and may make a comeback when the new law comes into effect.

Why did businesses start charging for paying with credit or debit cards anyway?

Businesses have to pay to accept credit and debit cards. It is typically a small percentage of the payment amount, such as about 1%. In the past, some companies have tried to pass this cost on to their customers, often also adding a healthy profit margin on for themselves.

What should you do if you’re still being asked to pay a surcharge (after 13th January 2018)?

If someone is still asking you to pay a surcharge for paying with a consumer credit or debit card on or after 13th January 2018, then here’s what you can do:

  • If you haven’t paid it yet, you can refuse to pay it.
  • If you have paid already, you are entitled to a refund.
  • You may wish to report them to your local Trading Standards. Citizens Advice explain how to do that here.

Further Reading


What else do you want to know about this? Let us know in the comments.


Top #VATMESS Tweets

On January 1st 2015, the EU is introducing changes to the VAT rules that will affect anyone selling digital products to consumers in the EU. As numerous people have pointed out, this is going to add a huge amount of paperwork that will be particularly burdensome for very small businesses.

There are calls for an exemption to the rule for small businesses and that’s an idea I very much support.

Many small businesses have taken to Twitter today to voice their concerns about this issue using hashtag #VATMOSS. Not surprisingly, the hashtag #VATMESS has also been popular. Here are some of the top #VATMESS tweets so far:


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