The banks are rushing to phase out cards that also offer a cheque guarantee, usually £100 or £250. This will hit many small businesses who rely on the cards to ensure they will be paid.
What are the options?
1. Insist on payment in cash - an easy way to lose business.
2. Accept a cheque and hope that it doesn't bounce.
3. Paying whatever the banks demand for a chip and pin machine.
The problem with option 3 is that, in the current economic climate, the cost for a small business could easily put them on the brink of bankruptcy.
lloyds for example charges up to £30 per month + VAT to rent a card reader. Add to this 3 percent for credit transactions and 50p per item for debit cards - plus £150 to £200 set up charge. Mobile readers can cost even more.
It could easily cost a small business £800 a year which might be the difference between surviving or going under.
These costs compare to 60p to £1 per cheque with no other overheads.
According to the Payments Council research among businesses accepting guaranteed cheques showed that they made up only 10 percent of all the payments they received.
However, this represents a significat number of firms relying on the guarantee. Let us know what you think.
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