stoozing from cashback % being more than merchant fees

city_knight · 12 August 2007 at 1:45PM

Is there a loophole to exploit that the cashback % from a visa or mastercard is actually more than the commission a merchant (anybody who can accept card payments) has to pay for accepting the card?
A typically good merchant rate for mastercard or visa transactions is 1.2%. A simple agreement with a merchant could yield some good benefits, limited only by your credit limit and the time taken to clear the balance so that it can be used again.
Even a ripoff merchant service like PayPal could be used and that way the money wouldn't need to leave your sphere of control. Pay for a non-existent service using your cashback card onto your own PayPal account and immediately withdraw it to your current account. Pay the card balance off and start again.
eg. £20k limit on Capital One 4% cashback
"buy" £20k of product earning you £800 cashback
merchant takes 1.2% "refunding" you £19760 by BACS or CHAPS (typ £20)
net profit £540.
Pay the card balance with another CHAPS transfer and this could net £520 on a 1-2 day cycle if the merchant has enough funds to refund before they receive your vsia payment into their account.

What are people's thoughts on this?

MarkyMarkD · 12 August 2007 at 4:24PM

A merchant paying a "good" merchant rate isn't going to be interested in scamming Visa/Mastercard for your benefit.

Most decent cashback rates have an upper limit, meaning that you can't do what you suggest.

emma396 · 12 August 2007 at 4:26PM

is there a charge for lifting money from your CC into your paypal account?

globalds · 12 August 2007 at 4:33PM

I have just managed to get cash from my credit card ...Read this thread http://forums.moneysavingexpert.com/showthread.html?t=506580
I have now seen my first statement and the person at virgin has managed to do this buy turning my cash transfer into a balance transfer .
You are quite welcome to try this as by the time i had made my third call ,I realised that I could have just made up the story about the first call .
The important thing is that I had to phone a specific department (Rates ) They were the only ones with ability to discount the standard rate for cash .

city_knight · 12 August 2007 at 4:59PM

emma396 wrote: »

is there a charge for lifting money from your CC into your paypal account?

Yes, PayPal will charge from 1.4% to 3.4% to accept the payment from Visa/Mastercard.

MarkyMarkD wrote: »

A merchant paying a "good" merchant rate isn't going to be interested in scamming Visa/Mastercard for your benefit.

Most decent cashback rates have an upper limit, meaning that you can't do what you suggest.

I think one man's stooze is another's scam. Exploiting a loophole or unintentional benefit for financial gain. I couldn't see an upper limit in The Capital One T&C. Also, lots of members here will be merchants themselves. Visa/Mastercard would indeed gain revenue, from the 1.2% they charge. The "losing" party would be the card issuer, which I think is the definition of stoozing.

sammyboy999 · 3 October 2007 at 1:38PM

Google Checkout are not charging any merchant fees until January 2008, so - potentially - this may work.

Anyone tried it.

The only thing I can think of to stop it working is if the Merchant has to pay tax on the income.

mrkbrrws · 3 October 2007 at 1:59PM

city_knight wrote: »

What are people's thoughts on this?

I would have thought you are breaking Terms & Conditions somewhere along the line by paying for goods/services that do not actually exist, and therefore are only really transferring cash. Surely the card companies would treat this as cash advances if they knew about it and could be fraud if it was hidden from them?

city_knight · 14 November 2007 at 1:55AM

sammyboy999 wrote: »

Google Checkout are not charging any merchant fees until January 2008, so - potentially - this may work.

Anyone tried it.

The only thing I can think of to stop it working is if the Merchant has to pay tax on the income.

That's very interesting..

Milarky · 14 November 2007 at 10:20AM

city_knight,

PayPoint is a good place to start as its use is growing. See this thread (post 11 in particular) for another discussion of this aspect of the capital one card. I have been able to put a considerable sum through as 'purchases' without attracting the suspicions of anyone and my capital one cashback is currently showing the full credit for this.

Basically it's legal unless misrepresentation is involved. It is up to the credit card issuer to police cashback in the fiscal sense (e.g. by making stricter rules later if necessary) but in general they won't 'come after' you if you've done it once and not told any lies - and that is the case here.

stoozing from cashback % being more than merchant fees

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