We did it! Unfair card surcharges are being banned

Sadly, but not at all surprisingly given the state of the government and the banking industry, the cap of 50p on a debit card and 2% on credit cards means that the retailers are still actually going to lose out because the banks still charge vastly more to process DEBIT cards than they do to process CREDIT cards – i.e. the government has got it back to front (again).

This is a complicated issue (politically) because the government has backed the banks in trying to abolish cheques (which the banks charge far less to process, undoubtedly why they want to force everyone to use DEBIT cards, so they can make more money) and the banks have all but succeeded because in abolishing the Cheque Guarantee Scheme most retailers now won’t risk taking cheques. Therefore the government would be in an awful egg-on-face position if they limited the charge on CREDIT cards at a lower (realistic) rate than DEBIT cards as the true way in which the banks are profiteering from DEBIT cards would become better known.

The upshot is that the larger retailers will simply add a little extra onto the mark up on all goods, so that everyone, paying by all methods including cash, pays to subsidise the processing of DEBIT cards, and the smaller retailers will simply be squeezed further and more of them go to the wall.

Also the caps on the charges don’t take account of the punitive charges which the banks levy on retailers for the purchase or rental of the card terminals, the cost of the telephone call which every terminal makes every time any card is inserted, even if the transaction is aborted or declined and the cost of the electricity to run the terminals (which is infinitesimally small for one terminal but when you consider large stores with maybe 40 or 50 terminals in every branch and possibly hundreds of branches soon adds up). Not to mention the fact that the banks FINE retailers who do not process enough card transactions in a month to produce the agreed “tariff” for the bank – this fine is often in the order of several hundred pounds a month and is levied even if the retailer is just a penny short of the “tariff”.

For anyone interested in finding out more details of these issues, look at the Which? Convo’s about credit and debit card charges, cheques, the cheque guarantee scheme and Chip & PIN – there is endless detail from many people’s perspectives, including small traders who have been forced out of business by the processing charges.

I’m not saying that we should allow the free for all of sky-high charges to the customer, far from it, and from the customer’s point of view, which? and the government have made some positive steps here, at least at face value, but the upshot will be that every one of us pays a little more for every item we buy and every service we use and quite a few traders will suffer and fail …. some of them will be owned by individuals who are “customers” elsewhere.

As in so many issues, the REAL issue lies with the banks and no one, Which?, Government, or anyone else, seems willing to tackle them, even now.

Dear Charlotte,

Thank you for your response.

I call upon everyone who has commented on this Which? conversation board to make their views known. Do you think that the real issue is the removal of ALL surcharges which are applied to using your Credit and Debit cards?

This has now come down to a simple issue and I hope that there will be a great response from everyone. Thanks.