Accepting Credit Cards
Why You Should Accept Cards
Credit Card Purchases:
As a small business if you do not accept cards from your customers you are probably loosing valuable sales from customers who prefer to use credit cards instead of cash or cheques because they know their rights under Section 75 should something go wrong with the purchase
What is Section 75?
The next series of posts focuses on credit card purchases, specifically exploring the ramifications of the law specified in ‘Section 75’ of the Consumer credit Act 1974.
Section 75 is a piece of legislation that states a credit card issuer ( bank ) can be held equally liable in a credit card transaction for faulty goods, should the credit card payment exist within the boundary of £100-£30,000. For example, the value of an order placed with an online retailer worth £500 will be refunded by the issuer, if the retailer were to go out of business before delivery of the purchase. The regulation will also apply if goods are broken upon delivery or a service has been falsely advertised, etc. Claims can be made whether the customer has paid through a physical card machine or a virtual terminal.
So, by making use of card payments on a regular basis, the customer is far more likely to be protected by law if the transaction does not bear the fruit intended. If unsure as to whether entitled to a section 75 claim, credit card holders should check if a Debtor-Creditor-Supplier agreement is in place when the transaction is made – this is the indisputable link between the credit card payment and the goods or service purchased; effectively, it is proof to the finance company of the direct relationship between the two parties. Bank loans are an example of indirect funding, so the law does not protect the card holder in these cases, regardless of the value of the loan.
Another pitfall is in regard of the interest that issuers charge with every transaction. Its value, in most cases, will often compensate for the claim itself and protection becomes useless anyway. Experts suggest avoiding this by setting up a monthly direct debit that pays off the card so as not to have to pay interest at all.
In the cases of debit and prepaid cards, or a credit card payment of value below £100, section 75 does not apply, although alternatively card holders may be able to claim chargeback, in which a supplier’s own bank offers money back for faulty card payments. More often than not, card holders will make this claim when they believe a transaction has been authorised without their knowledge.
Section 75 is but another form of card processing solutions for the card holder and a vital piece of legislation that it pays to become familiar with. Consumers have become very aware of their rights when making purchases and are more likely to use a card when making a purchase.
Stef Lenza
12th January 2012
