Small businesses will not be able to charge customers for using credit or debit cards, after new EU legislation took effect this week.
HMRC announced that it will cease to accept payments by personal credit card as a result.
The legislation, known as the revised Payment Services Directive (PSD2), will also pave the way for ‘open banking’ where individuals can allow approved third parties, including finance providers, accountants and price comparison sites, to access their current account transaction details.
Responding to the changes, Federation of Small Businesses (FSB) national chairman Mike Cherry, said: “The EU legislation taking effect represents a double-edge sword for small businesses.
“The proportion of small firms reporting a rise in operating costs is now at a five-year high. Removing their freedom to share the burden of card payment fees will give them yet another outgoing to worry about.
“It’s hypocritical of HMRC to stop accepting personal credit card payments, as they consider them too expensive to process, while small firms are expected to absorb those same costs.
“Small businesses don’t want to pass on card fees to their customers, so it’s high time for policymakers and businesses to work together to bring down the charges levied by card providers.”