/ Money

The death of the rip-off card surcharge

Paying on card

Thank you to over 40,000 of our supporters who backed our campaign to end rip-off card charges. These sneaky fees for using credit and debit cards finally get the chop. Have you been stung by a card surcharge when making a payment?

A long-standing Which? campaign had a big win today as rip-off credit and debit card surcharges have been banned once and for all by the government.

Today’s announcement from the Treasury is an extension of the revised EU Payment Services Directive (PSD II). The ban will bring an end to retailers adding extra charges at the checkout for all card payments, including credit and debit cards as well as digital payment services like ApplePay and PayPal.

Sneaky card charges

Back in March 2011, we used our legal powers to submit a super-complaint to the Office of Fair Trading (OFT) to force an investigation into card surcharges. Our super-complaint came after we found that these charges were often far in excess of what it cost companies to process card transactions.

The OFT investigated the issue and upheld our complaint. It then began to look into what could be done to stop unfair debit and credit card surcharges. As a result, in December 2011, the government agreed to take action and confirmed it would ban excessive surcharges. This ban came in to force in April 2012.

But these rules meant that surcharges weren’t banned, but must reflect the cost incurred to the firm for processing the payment.

We estimated that it would be no more than 50p per transaction for debit card payments or 2% of the total transaction price for credit card payments. While it’s difficult to gather a full picture of how much card surcharges cost each and every business, it makes the justification to add charges of up to £10 for bigger transactions, such as for travel bookings, somewhat questionable.

And while some companies have dropped or reduced their charges over recent years, there are still many that haven’t. For example, an investigation by The Times last year revealed that Queen Mary University of London charged 2% on tuition fees in certain circumstances, Eurostar a £3 flat fee and Everyman Cinema 75p per ticket.

A real ban?

This new blanket ban on surcharges for all payment instruments will come into force in January 2018, but the question now is whether or not companies will absorb the cost and not pass them onto consumers in other ways.

Have you been charged unexpected fees for paying via credit or debit card? Do you think this ban will help you?

Comments
Profile photo of Ian
Member

I don’t want to introduce felines among the avian friends, Lauren, but are those regulations solely UK government, as the header suggests, and are they entirely the result of Which? pressure? There’s a small sentence in the linked article: “The government is implementing a new set of rules on payments written in the EU, meaning that surcharges will be scrapped in all member states next year, too.” The Scotsmans also leads with this: “it should be pointed out that the measure is the result of an EU directive. And when Stephen Barclay, Economic Secretary to the Treasury, preaches “fairness and transparency” and promises “no more nasty surprises”, let it not escape anyone’s notice that HMRC, a public agency, levies a charge on those who pay their tax bill by credit card”. As, of course, does DVLA.

Profile photo of Lauren Deitz
Member

Hi Ian, we’ve done an awful lot of lobbying on an EU level with the Payments Services Directive (not just Which? staff members, but our supporters too who wrote letters to MEPs back in 2011). The Treasury’s announcement is regarding the implementation of these rules in January 2018, although the UK’s implementation does go a little bit further than PSDII. It was a Which? super-complaint that brought the issue to the table in the UK in 2011, but since then a number of other consumer advocates have joined in on this too.

Profile photo of Ian
Member

That’s interesting, Lauren. When something like this is announced the politicians will be falling over themselves to claim credit. The detail you’ve given shows this is far from the case. Thanks.

Member
Patrick Taylor says:
20 July 2017

These aspects of the EU being useful rarely enjoyed much publicity in the UK. It is a shame that the BUEC site [consumer groups in Europe] is not linked directly to Which? and a commentary made on EU decisions which affect UK citizens also.

Improved payments law: down with surcharges, up with safety

PRESS STATEMENT – 08.10.2015

With today’s vote in the European Parliament, the final hurdle to an upgraded EU payment services law that aims to make payment transactions safer and terminate card surcharges has been cleared.

The way people make payments is changing fast – increasingly payments are made via other providers than one’s bank (so-called third party providers).

Consumers will benefit in the following ways:

Surcharges for the use of debit and credit cards (for example when booking a flight or hotel) will be banned;
The consumer’s personal liability in case of fraudulent payments (for example with a stolen card) will be reduced from €150 to a maximum of €50. This amount can be further decreased if for instance the consumer did not act negligently;
Consumers are entitled to a direct refund from their bank in the case of an unauthorised transaction when using third party providers (for example Sofort or Trustly);
Security breaches or data losses must be communicated immediately to the users of payment services.

Monique Goyens, Director General of The European Consumer Organisation (BEUC), commented:

“Card fraud for euro payments amounts to €1.4 billion1. With new payment players entering the market, it is paramount that security is continuously being strengthened which is why, the upgrade of the EU’s payments law is a positive development.

“Having your bank card or bank details stolen is a very stressful experience. And being forced to pay hefty personal liability fees is just adding insult to injury for the victim. This law will substantially bring down consumers’ personal liability.

“In addition, surcharges for card payments are finally becoming history. They are often excessive and unjustified, and banning them in Europe is a great achievement for consumers.”

1 European Central Bank, https://www.ecb.europa.eu/pub/pdf/other/4th_card_fraud_report.en.pdf

Profile photo of Lauren Deitz
Member

Thanks for sharing, Patrick

Profile photo of John Ward
Member

Traders will not willingly take a drop in income, especially where they do face merchant charges from the card industry. Perhaps the cards will have to lower their expectations as well and reduce their handling costs and charges. For companies like travel operators who have done very nicely out of card charges it is almost certain they will spread the cost of not recouping them in future across all their customers. This will mean that those who up to now have settled without the use of a card will end up paying more because the fees will have to be incorporated in the headline prices without discrimination between cash- and card-paying customers. And if we all decide to pay by card in the future traders will incur even higher merchant charges which they will pass on to all customers. This is a win for consumers?

Profile photo of Lady Janey
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I welcome the end of these charges which can often be disproportionate and unfair. However, I am also concerned John that higher merchant charges will be passed on to customers who will then be worse off in the long run. A somewhat hollow victory.

Profile photo of DerekP
Member

I agree that this sounds like a rather hollow victory for consumers. A bit like “now you can borrow enough to get completely out of debt…”

Profile photo of Lauren Deitz
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Hi John, what this ban does is bring an end to the nasty surprises when you make a payment on card. That said, we share your concern here and that’s why we’re keen to keep an eye on how this is implemented.

Profile photo of Sophie Gilbert
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If charges are passed on the customers from the outset regardless of how they ultimately pay, it is possible that if spread over all they could represent only an extra few pence/a quid/couple of quid per purchase. As charges currently seem to vary wildly from company to company and you only find out at the moment of paying, price comparison can be a real bother.

Profile photo of John Ward
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Thank you Lauren. I agree with you, and it also should eliminate the profit element inherent in the present situation and leave that money in customers’ hands. Whether, because they are treading on a false margin, any companies would go to the wall as a result remains to be seen, but I tend to take Sophie’s view that averaged out across all purchases it would be infinitessimal and most companies should be able to cover it through efficiency and productivity improvements.Nevertheless, there is a risk of price inflation and I glad that Which? is going to keep an eye on it.

Profile photo of John Ward
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I meant “trading”, not “treading”, in the third sentence.

Profile photo of malcolm r
Member

If we want organisations to handle our transactions by providing credit, as those cards do, then a cost will be incurred. I use my card, pay it off in full monthly, and get up to 2 months free credit. How to pay for this service? Either make a direct transaction cost to the customer, use the interest others pay, or spread the cost over all purchasers. Either way we will pay.

I prefer a system where we pay for a service openly. My local computer supplier charges £2 to handle a cheque, 2.5% for a credit card, nothing extra for cash or a bank transfer/debit card. Seems sensible to me.

It’s all really a bit of smoke and mirrors – we pay in the end.

Member
Diane Phillips says:
20 July 2017

I am a carpet retailer. A husband & wife partnership that makes little profit but we are working. (One camping holiday per year & a very basic lifestyle).
We take cards & only charge what we need to cover the merchant chges. Credit card sales @2% (& VAT paid out of that) does not fully cover the chg to us. No chg for cash, BACS or Debit cards. This is NOT ripping customers off in any way. Since charging for credit cards only, their use has dropped by 80%, saving us chges during the dire recession. Trade is still not the same as pre-recession.
I agree the ‘ripping off’ does occur & good strategic law should cover this. But in Jan ’18, the baby is being thrown out with the bath water & careful customers (debit, cash or bacs payers) WILL pay for those who use credit cards with abandon. Maybe the merchants companies should be stopped charging me for the debit & contactless transactions? See how that goes down?
Blanket law is as bad as no law. Why can’t the lawmakers/writers (who no doubt earn far more than i do) devise good, strategic, common sense law to cover this. Is this beyond the ‘wit of (well paid) man’? ?
We are not a Limited business & we cannot afford to sub customers’ credit habits. We personally do not use credit cards. But we do get stung by small shops that unfairly refuse debit cards on sales under £5 or£10. We cannot afford foreign holidays but I know people are also ripped on travel chges when using debit cards too. This is where the law should level the ground, not throw a ‘grenade’ at it!

Profile photo of Sophie Gilbert
Member

Some of use use credit cards not “with abandon” but because of Section 75. Please see MoneySavingExpert.com or our very own ?Which.

“What is Section 75?

It’s a vital law made in the UK in the 1970s that means your credit provider must take the same responsibility a retailer does if things go wrong with a purchase. In a nutshell…

Pay for something costing between £100 and £30,000 on credit and the provider’s equally liable if something goes wrong.

This isn’t the credit provider being nice. It’s a legal protection put in place so that you’re never in the position of paying off debt for something you didn’t receive or wasn’t as it should’ve been. Whether it’s a flight, kitchen, computer or anything else, pay on a credit card, store card or with store instalment credit and the credit provider’s responsible too.”

Profile photo of wavechange
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I mentioned Section 75 earlier, Sophie, but have never used it and apart from a couple of people who have posted on Which? Convo, I don’t know anyone who has. It would be interesting to know how many claims are made each year and how many are successful. The Which? website also refers to ‘chargeback’ claims that can be made for goods purchased using a debit card and there is no requirement to spend a minimum of £100: http://www.which.co.uk/consumer-rights/advice/how-do-i-use-chargeback

Profile photo of John Ward
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I would expect after the new regulation comes into force to substitute a credit card for a debit card when making any purchase over £100 where a surcharge would otherwise have applied. I expect many other customers would do the same so there will be an increase in unmet costs that ultimately would have to be recovered through the price [or through increased sales within the same overhead – which in recessionary times probably means knocking out some competition].

Obviously some shops would just stop accepting credit card payments and risk losing business. Some might be open to negotiation in some way that provided the cash buyer with a discount or a superior service but be unable to negotiate with a credit card purchaser; some ingenuity might be required to work around any legal stumbling blocks but it should be within the competence of the average British shopkeeper who is generally quite adroit in these matters.

Profile photo of wavechange
Member

If I was in business I would assume that the customer would pay by credit card and set prices accordingly. I could then offer a small discount to those customers who payed by debit card or bank transfer. Have I overlooked something?

Profile photo of John Ward
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I am not sure Wavechange. I haven’t read a reliable comment on whether that is regarded in law as effectively a surcharge by another name frustrating the point of the EU’s regulation. That is why I suggested a degree of creative subterfuge where some other form of value was introduced into the transaction for cash customers. Perhaps Which? can advise.

Profile photo of wavechange
Member

I don’t think I would have fared well in business, John.

Profile photo of wavechange
Member

I always check for card surcharges but have never found a company or other organisation that has not been upfront about card charges.

Paying by credit card gives protection under Section 75 of the Consumer Credits Act, for purchases over £100. I have never made use of this, but would do so if let down by a retailer. I pay my credit card bills in full by direct debit and benefit from a period of free credit. It’s obvious that I should contribute to these benefits and it would be fairer if I did so if it cut down the interest charges for those who do not pay their bills in full.

Member
denton davies says:
20 July 2017

Having read in one of the daily National papers this week, that they are fighting to do away with our currency en block in the very near future, its alarming to read of such idiotic ideas in my mind. When one of the largest targets for Fraud is by targeting these card payments.

Member
G Skipworth says:
20 July 2017

I hope this will also apply to the government charges when renewing my road tax (vehicle excise duty). You can only currently pay by Debit Card for free but have a charge if you pay using a Credit Card. I like to use my Credit Card because I get points which can be turned into other ‘money off’ vouchers etc.

Member
Linda Dawson says:
20 July 2017

Fantastic……

Member
Tom Dyson says:
20 July 2017

Excellent result – and how about theatres which charge a ” booking fee” of two pounds or more, per ticket, even when you are standing in front of them at the booking office desk with cash?

Member
Jyotish says:
20 July 2017

Yes, why not indeed. There many other examples one of which comes to mind is trainline .com charges a fee for buying rail tickets.

Profile photo of wavechange
Member

I have not used Trainline since I discovered that I could book the same trains via another company and not paid a booking fee of £1. I see that Trainline have dropped their fee to 75p, but that’s 75p too much when others don’t make a charge.

Member
Jyotish says:
20 July 2017

Regardless. who ,which body, which directive pressurised this govt, it was the common consumer one way or another helped to bring about the desired result. The consumer now benefits as will all with their own agendas too.
Thank you “Which”

Member
SJ says:
20 July 2017

I work a few hours in a little village shop. There is a cashpoint outside (which recently, with increasing frequency, is out of use) and a post office inside. The shop currently charges 50p for any card purchase – debit/credit/contactless – under £10. Over £10 there is no charge. I encourage customers (not spoken about, but I believe frowned upon) with a spend of less than £10 to either use the cashpoint (24 hrs), or post office (only 08:30-18:00), or top up their spend to the magical £10. It’s worth having a packet of chewing gum (urgh!) costing 50p to avoid a 50p charge. I think. I feel dreadful charging 50p for a £9.99 spend. Some people use a card incurring the 50p charge on spends under £3.00! Crazy. For my own interest, I tried researching the actual cost of accepting a card payment, but gave up because it was just too complicated.
I wonder what will happen from January. I cannot see the shop absorbing the charge to them when they will be unable to recover it. Interesting times.

Member
Alex says:
20 July 2017

What is amused me, is that business practice to charge a customer some extra for using debit/credit card, and not to offer any discount for paying by cash. Odd, isn’t? Oh, yes, the business is charged by its bank for bringing them stack of cash too! OK, what about this: these payments are clearly is the business expenses, which are deducted from their accounts before profit calculation. So, how ethical is the practice to charge a customer today, or spread such a cost in the future? – The answer is: GREED!

Member
Ian Howitt says:
20 July 2017

Thank you for your excellent work regarding this. However I fear the costs will just be added to the product being purchased, thus absorbed another way.

Member
Wendy Hartle says:
20 July 2017

These charges are totally unfair & must be removed immediately!
As should charges for printing out our own tickets!!!!!!

Member
Laurence Shelbourn says:
20 July 2017

This ridiculous EU directive is not going to save the consumer one penny, in fact charges across the board will only increase. Those of us who pay by debit card, bank transfer or cash will now be paying a lot more to cover those who elect to pay by credit card. Hotel Bookings, Air Flights, Road Fund License and all manner of other things will now increase in price for every one of us.

I deal in antiques and collectables, when conducting a sale there is usually some negotiating involved regarding the price of an item, I will now need to verify what payment method the customer will be using before finalizing the sale, I certainly cannot give the discount twice by absorbing the charges levied by the bank, the only other alternative is not to accept credit cards.

In business, I purchase and sell items at auction, the buyer’s premium and sellers commission is between 10% and 15% plus vat depending on the auction house. If a customer elects to pay by credit card, a fee of 2-3% is levied to cover the charges made by the bank, the auction house cannot absorb the 2-3% card processing fee so they will have to increase the buyer’s premium and sellers commission by the equivalent amount, that also increases the amount of vat due and so the consumer is worse off, it’s a loose, loose situation. Another EU own goal, when will they ever learn!

Profile photo of MacRoss
Member

Surely they will just CHANGE THE NAME and call it TRANSACTION charges or somesuch. They are beyond sneaky at getting around these rules and are a very powerful lobby. Am I being cynical?

Member
cazincule says:
20 July 2017

Very useful change. It brings up to date across Europe the conditions for using cash or credit cards indifferently for transactions. What it does not do is to prevent sellers from insisting on transactions by credit/debit card thus thwarting the use of cash (coins of the realm or bank notes) which I would have thought is the legal requirement for the settling of payments. I say this as the recent experience at a mobile telephone store was anything but pleasant with a tug of war on the basis of ‘take it or leave it’.

Member
Christina Allen says:
20 July 2017

This is both good and bad news I fear, especially for those flying EasyJet – they will just increase prices to compensate!

Member
J Mead says:
20 July 2017

Oxford City Council is charging a fee at their car park pay stations for using a card of any sort. However I know this is not strictly a retailer but it seems a bit mean these days.

Member
alan francis says:
20 July 2017

Not so sure this is a good thing. It’s the card issuers that should be being tackled, not the companies who now have an additional cost to absorb whilst the mess we’re all still suffering from which was created by the banks and they’ve got of scott free. Sorry Which but you have got this completely wrong. lets get card issuers to drop charges to businesses now that would be a win!

Member
Jakob Ashkelon says:
20 July 2017

Corner shops are the most notorious appliers of rip-off charges.
I would like to support local businesses, but as they apply those robbery charges, I have no choice but to keep using supermarkets

[Sorry, your comment has been edited to align with our Community Guidelines https://conversation.which.co.uk/commenting-guidelines/. Thanks, mods.]

Member
Jim McGivney says:
20 July 2017

Pity proper prominence isn’t given to the fact that this is an EU initiative which the UK government is only falling in line with (cf roaming charges, etc).

Member
Linda Baddeley says:
20 July 2017

Businesses will just up their prices to compensate for any lost income from card charges.

Member
GILLIAN DAVIS says:
20 July 2017

Yes, airlines and insurance companies add fees regularly!

Member
Ross says:
20 July 2017

The government itself does exactly this by charging for credit card use when paying for car tax

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I agree with Alan Francis, the EU directive should have insisted the banks reduce their charge in line with the charge for debit cards which is 20p – 30p per transaction, that would keep the consumer and the business owners happy. The banks are already making a healthy profit on credit cards by charging their clients 16% – 35% and more sometimes.

Member
Eric Barker says:
20 July 2017

When buying a ticket for instance online, there is no other option but the card payment, so if it’s the only method you can use, why is there a charge for it anyway ?

Profile photo of John Ward
Member

Good point , Eric – it should be incorporated into the selling price [unless the surcharge is a flat rate on an order irrespective of the number of tickets purchased]. But I expect the sellers have to maintain the fiction that there is a face value on the seat whereas the ticket price for each seat goes up and down with market demand and proximity to the event. Ticket pricing is a bamboozling contrivance that the entertainment industry has been concocting for generations but which has reached its apogee following the introduction of highly sophisticated computer software that effectively manipulates the market and denies the market full knowledge. The market is therefore an imperfect one: opaque and obscure and riddled with distortions . In its present form it is supported by the government because it will not dare to correct it. In my opinion every level of the industry is in it up to its neck despite the occasional protestations to the contrary by certain artistes.

Member
Catherine says:
21 July 2017

DVLA won’t even accept debit cards over the phone so a credit card with surcharge is only way available-to make life easier!!

Member
Ian says:
22 July 2017

The current arrangement sees the card processing fee specified as a separate and transparent cost. Treasury rules limited the retail charge to no more than the actual cost incurred in processing the payment.

In future, the card processing charge will now be built into the cost of goods and services purchased. Those who pay by cash will be subsidising this.

Presumably retailers and traders will no longer be able to offer a cheaper deal for cash?

Member
Richard Thomas says:
22 July 2017

Dear Lauren,
While the banning of charges for use of credit and debit cards is good news, perhaps now you can turn your attentions the the diabolical costs of taking debit and credit card payments levied by the banks on businesses.
I own a bar in London. Only the one, not a chain, and the charges we have to pay for accepting credit and debit cards is seriously impacting our ability to survive.
In the last 2 years we have seen credit/debit card payments leap from 20% of our takings to 70% of our takings. As a result, we have had to rent an extra card machine for £50 a month. This takes our card machine rental up to £1200 a year.
Then there are the costs levied against us by the banks for accepting these payments. These range from 30p per transaction for some cards to 3.5% of the total transaction for others, and it is costing us thousands of pounds a year, when we do not have thousands of pounds a year to loose.
We have to accept card payments, but why should the banks now profit from my hard work, when I barely profit myself?
It was already bad enough when I was mostly working to pay insane amounts of rent, business rates and taxes. Now I’m working for the bank too, and it’s diabolical.
People complain that small businesses are disappearing and the high street is being taken over by corporations and chains, but as long as people choose to use credit/debit cards in stead of cash, and as long as banks are allowed to charge these rip off fees, small businesses will continue to disappear until there will be nothing but faceless chains and corporations left, and then we will all be poorer.
So far, we have not added a charge for using credit/debit cards, but if my bar is to remain viable, I have no choice but to increase the price of my drinks. The end result of that is that I loose and my customers loose, but the banks win.
If you want to help customers and small businesses, please campaign to end the banks right to steal my profit just because customers are to lazy to go to a cashpoint machine.

Member
Phil regan says:
22 July 2017

When I order home heating oil or pay for car or house insurance I am always charged for using a credit card but not a debit card.

Member
Judy McKee says:
24 July 2017

Unfortunately, Section 75 doesn’t always apply. I booked a holiday at a “Hotel and Spa” in Ireland that I’d stayed at before, only to find that the leisure centre/spa had been closed down since booking. The hotel refused to take responsibility for their failure to notify me so I tried to claim under Section 75, only to find that the protection does not apply when using a credit card to pay a third party – the booking agent. That business is based in Brussels and their terms and conditions also prevented my refund.
I always pay by credit card for anything costing more than £100 in the expectation that if things do go wrong, I’m not out of pocket; but bear in mind there are gaping gaps in this protection.

Member
Tom says:
26 July 2017

This is not a victory for small business, at all. We pass on the, ridiculous, charges that are levied at us from those who wish to use a credit card – By all means, enjoy your air miles, free insurance, cash back etc but don’t expect it to be free! We swallow the debit card charges and accept cash and bank transfers.

This move could cost us over 10k-20k a year which we will need to pass on in some way or another. Many businesses will need to do the same.

Does this ban apply to those outside the EU – Are we able to apply a surcharge to somebody with a US card, for example? I’ve tried to read the legislation but quite seem to find a definitive answer..

Profile photo of alfa
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I am a bit late, but this is excellent news.

A few weeks ago we were going to buy something over the internet. It had been on a very good special offer but we missed out but decided to buy it anyway. When we went to pay, they were going to add 3% CC charge. To cut a long story short, to avoid paying the charge, they added on £40 delivery charge. We did not complete the transaction.

Member
Andy says:
2 August 2017

Great, thanks a lot. As a small business owner who is paying through the teeth for the ‘privilege’ of accepting cards this is hardly what I would call a victory. I’m paying a monthly charge for a payment gateway, another monthly charge for a merchant account plus a monthly charge for being PCI DSS compliant. All this adds up to a big chunk out of my monthly income before I’ve even accepted a single card transaction! It’s another 15p per transaction on top of these monthly costs, and if I had an in-store card machine that would be at least another 30 quid per month rental. And there’s an initial £99.00 (plus VAT) set up charge as well.

While I’m certainly against businesses profiteering on card transactions by slapping large fees on top, I don’t think it’s at all unreasonable to charge 40-50p per transaction to help offset these costs.

If Which? had really wanted to do both consumers and small businesses a favour they would have targetted the rip-off credit card companies and banks for charging extortionate fees for credit card transactions. In this world of electronic transactions the actual running cost to them is minimal, there is no reason to charge such high fees and to add insult to injury they charge a fee for PCI DSS compliance – even though we the merchants are the ones doing the work and providing the certification!

The only outcome of this so called ‘victory’ will be that more and more businesses will simply stop accepting cards as it’s just too expensive.

Profile photo of John Ward
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I agree with you, Andy, that this move is a mixed blessing, Traders must believe it profits them in the long run to acccept CC card payments otherwise they would stick to cash and cheques – and give those a wide berth. One of the things to bear in mind is the value of the guarantee a trader gets that the payment will be honoured even if the customer defaults on repayment to the card issuer. That is a form of insurance that must be worth something in the retail equation. They also bring forward sales that would not otherwise not take place for some time and that has a value as well.

Member
Andy says:
4 August 2017

Thanks for the reply John. As I trade online only, cash is not an option. I do offer cheque and BACS payment options but very few customers utilise these as it requires more effort on their part (and I might add that banks have already threatened the phase out of cheques so eventually they won’t be an option either). In this day of “convenience”, if it takes more than a few clicks of a mouse then people just won’t bother, they’ll head over to the likes of Amazon or eBay and buy the same thing for a ridiculously low price that I just can’t meet and then pay by credit card so it feels like they’ve not actually spent any money. With the huge buying power the big boys have they can buy at rock bottom prices, sell at a discount and still make enough profit to absorb the cost of credit card transactions.

Regarding the guarantee of honouring payments, that is not the case at all. A credit card transaction takes several days to go through and during that time the payment can be reversed by the bank at any time for any reason. When a customer makes a credit card purchase and it says “approved”, it can take up to a week for the money to appear in my account, however the payment can still be denied by the bank even though the customer thinks it’s gone through. Meanwhile, the customer gets annoyed if I don’t ship the item straight away because they’ve “paid” for it! The only guarantee is that banks will continue to make obscene amounts of money while small businesses (and ultimately, consumers) will suffer.

There really is very little benefit for a small business to accept cards, the only reason we feel we have to is to try and remain competitive and offer as many payment options as we can for the customer, otherwise they’ll just go elsewhere. I don’t believe this is a mixed blessing at all, it is lose lose for both business and consumer alike. If we don’t put a stop to this rampant profiteering by the big corporations that has become the norm these days then eventually there will be no small businesses, and then we’ll all be very sorry indeed..

Profile photo of alfa
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Andy, it is interesting to hear your side as an on-line trader.

Another side are the small High Street traders who are disappearing as they cannot compete with internet traders. I don’t know of any that make a charge for paying by credit card. Even our local newsagent and butcher accept credit cards although we try to pay them with cash that they still have to pay to bank.

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Thank you Andy. While it can take up to a week for the credit card transaction to be processed, once that has happened you do get the payment for the sale even if the buyer subsequently defaults on his or her credit card account.

I can understand that if you can’t take cash because that is not practical with distance selling, and customers will not use the faster payments system or send you a cheque , then you have no alternative but to accept credit card payments. Since all your competitors probably do so as well you are not at a commercial disadvantage.

I hesitate to suggest it . . . but you could join the Amazon Marketplace and have them do the dirty work for you.

Member
Andy says:
4 August 2017

Agreed, and I was one of those small high street traders. I started out online and then opened a shop in 2010 but the overheads were enormous and I had to close it after a couple of years and revert to online only. I hate to keep harping on about “greedy corporations” (admittedly, they are a sore point with me!), but the amount of charges levied on us by the utilities companies were nothing short of legalised extortion. And once you enter into a business contract you can kiss goodbye to all the rights you enjoy as a consumer. It’s shut up and pay up, or go bust….

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I have no recent experience of using Amazon, but they and other large companies seem to be able to deliver goods quickly even when paying by credit card. For example, rail tickets are often delivered the next day. Have the larger companies a special arrangement that overcomes the delay referred to by Andy?

Member
Andy says:
4 August 2017

Well that’s true, but the same can be said of most payment methods. If a customer doesn’t have any funds in their account after their cheque to me has cleared then it’s of no consequence, I’ve already been paid. If the funds aren’t there before the cheque clears then the cheque bounces. Similarly, if the customer defaults on a payment after the bank has processed their credit card payment to me it doesn’t affect me, I’ve already got the money. However, if the default occurs during the payment clearing process then the payment is reversed and I get nothing, even though it may already have been “approved” on checkout.

Don’t even get me started on the fees for selling on Amazon and eBay! They take more than their pound of flesh, and those are on top of the card fees.