Brief cases: full refund for heater that didn’t match claims

I had always supposed that, because credit card companies have to continuously transfer customers’ payments to sellers, they are in a position whereby they can withhold payments if it has been necessary to reimburse a card-holder under S.75. They already deduct the merchant service charge on each transaction and could raise the rate if a trader was causing numerous reimbursements. The credit card company’s ultimate sanction is to withdraw the card payment facility. I think the credit card companies have a considerable hold over traders, with strict terms and conditions, which has a powerful regulatory effect on retailing and, exercised correctly, is a very good consumer safeguard.

Section 75(2) gives the card issuer the legal right to claim back the amount from the deficient merchant, and you can be sure that card issuers exercise this right via a chargeback if the merchant is still solvent.

But your suggestion that the card issuer could withdraw the merchant’s ability to accept card payments, this is possible only with American Express, where the same party supplies services to both card holder and merchant. In nearly all other cases, the card issuer is a different party from the merchant services provider. And there’s usually a middleman between them, namely Visa or MasterCard.

Does this mean that anyone can demand payment facilities by credit card and that facility can never be withdrawn? Seems extraordinary. Must have misunderstood. Surely a delinquent business can have its ability to take payments from credit card holders terminated?

Malcolm, yes, the facility can be withdrawn, but it’s easy enough for the same merchant to set it up again via another provider. The point I’m making is that the facility won’t be withdrawn on the say-so of a card issuer, as they usually have no contract with the merchant.

Thanks NFH. So if I have an M&S Mastercard then any complaint I raise with them would have to be referred on by them to Mastercard for any action. I understand that, it makes sense, but is that not a routine when unacceptable merchant behaviour is uncovered by the card issuer? I only know of Visa, M/card, Amex. Are there others? If not, delinquent merchants would soon run out of options.

Yes, it would be up to MasterCard to ask the merchant services provider (acquirer) to take action. It’s very easy for a merchant to set themselves up with another provider. There’s a huge market now for this with very easy setup. The best I’ve seen is sumup.co.uk, which charges the merchant a flat 1.69% for all card types. This is in contrast to more established acquirers, which charge fixed monthly fees along with a lower percentage, which varies by card type.

Other card networks include Diners Club and JCB, but both of these have very few UK card holders.