Filenews 7 May 2023 - by Eleftheria Paizanou
Almost no business will be exempted from accepting credit cards from now on, as the number of economic activities obliged to serve consumers using cards is expected to increase in the coming days.
Since September 2021, when the law came into force, to date, a total of 93 economic activities from almost the entire spectrum of the economy are required to accept credit card payments. In fact, this week the Ministry of Finance will issue a fifth decree, which will add more businesses to the obligation to accept credit cards as a means of payment when consumers so wish.
A competent government source told "F" that the new decree will essentially include almost all economic activities in the law. He also said that the increase in the number of businesses will strengthen the effort made by the Tax Department to combat tax evasion, safeguard public revenues and strengthen citizen protection, as well as facilitate consumer service.
Under the law and the decrees, businesses active in retail, services and other sectors are obliged to install a payment card acceptance terminal, e.g. wireless and wired POS terminal, mobile POS and virtual POS applications, in order to accept payments with cards as well. It is worth noting that businesses that refuse to accept credit cards as a means of payment or impose extra charges on consumers will be subject to a fine of €4 thousand, based on the latest amendment to the legislation.
The provisions of the law
According to the law, in case a violation is found on behalf of the business, the officer of the Tax Department has the obligation within five working parties to submit a report to the Commissioner of Taxation, who within 15 days will have to decide whether an administrative fine will be imposed. Then, in case the offender fails to pay the fine, the Commissioner of Taxation takes judicial measures and collects the amount due as a civil debt due to the Republic. In the meantime, businesses that are complained about can file an objection with the Commissioner of Taxation within 30 days.
Fines imposed
According to information provided by "F", the Tax Department periodically carries out checks on businesses to determine whether taxpayers have complied with the legislation and installed a special terminal for accepting credit cards. During the initial checks, it was found that one in ten businesses had not installed a dedicated card payment acceptance terminal.
As we have been told, in the process the vast majority of businesses complied with the law, while those who refuse to accept credit card payments are fined. In addition, officers of the Tax Department are making recommendations to businesses to place signs informing consumers that credit cards are accepted.
In a statement, the Tax Department states that it carries out continuous checks and examines all complaints received, imposing the penalties required by law, without necessarily making public its results or actions. At the same time, it calls on citizens, where and where they find a violation of the law, to send the relevant information to complaints@tax.mof.gov.cy e-mail. A competent source told "F" that in the immediate future, the controls of the Tax Department for the implementation of the legislation will be strengthened.
The exceptions
Outside the scope of the obligation to accept credit cards are companies active in the sectors of manufacturing, electricity, water, transport and information and communication (publishing activities, film production, broadcasting, computer programmers). At the same time, government agencies are not obliged by law to accept credit cards as a means of payment, as they are not considered commercial services.
The new bill was waiting for greater clarity
It is well established that some small businesses impose or attempt to impose extra charges on consumers when they pay with credit cards for certain products, such as telephone cards, cigarettes and newspapers, on the grounds that the profit margin they have from these products or others is small.
Members of the House Trade Committee prepared a bill that closed legal loopholes as it was found that there was no legislation protecting consumers. Those who broke the law and imposed charges when purchases were made with credit cards did so knowing that they would not be subject to any specific penalty. Following the approval of the bill by the Plenary of the Parliament, the competent authority was the Consumer Protection Service of the Ministry of Commerce, to which consumers can file complaints when businesses impose additional charges when shopping with credit cards.
A bill that addresses other legal ambiguities in the legislation is expected to be discussed in the coming days in the relevant parliamentary committee. Some entrepreneurs interpret the law as they see fit, as they believe that surcharges on credit card purchases are not universally prohibited. The bill clarifies that no one is exempt from the law and with the passage of the text will denounce those businesses that impose extra charges when consumers pay with credit cards.
The bill amends the law on the Provision and Use of Payment Services and Access to Payment Systems. Following complaints received by the Consumer Protection Service about the continuation of surcharges when card payments are made, it found that two articles in the law conflict. According to the explanatory memorandum of the bill, there is an interpretative conflict between Article 60(1) and Article 62(5). In particular, under Article 60(1), when paying by credit cards, when a trader imposes additional charges or offers a discount, he should inform the consumer before initiating the payment transaction. On the other hand, under Article 62(5), the entrepreneur is not allowed to claim charges for the use of this payment instrument. As noted, since the intention of the legislator was a total and without exception prohibition of the imposition of charges by the seller, the amendment of the legislation is appropriate for reasons of legal clarity.
It is worth mentioning that the bill has been referred for discussion to the House Committee on Finance, but representations are expected to be made to take it to the House Trade Committee, which also reviewed previous relevant legislation.
