Card processing fee
Comments
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The rules are very complex and they could not pass on the exact merchant service charge that the acquirer hits them with as it varies by card scheme/card type combination. MSC is made up of a 'per_item' fee plus an 'ad_valorem' fee (percentage of the transaction amount). Either of these could be zero depending on the merchant's contract with the acquirer but quite often they have both.
Per_item can be up to £30 or £40 but I have seen them in the hundreds occasionally.
Ad_valorem can be up to 5% with highs of 7% or 8% seen every now and then.
A flat 2% doesn't seem unreasonableI’m a Senior Forum Ambassador and I support the Forum Team on the Pensions, Annuities & Retirement Planning, Loans
& Credit Cards boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com.
All views are my own and not the official line of MoneySavingExpert.0 -
x_raphael_xx wrote: »Our company charges 50p on a debit card and 2% on a credit card as that is what is charged by the card machine company.
It's fairly accurate to cover our costs. For a fare of £60 we take a payment of £61.20, and receive about £60.09 into the bank account.
Then your company is getting ripped off. For example, Netpay will charge you 0.685% for credit card payments.
Why should the customer suffer because you can't be bothered to shop around?
I bet 0.685% is less than you pay to bank cash.
https://www.netpay.co.uk/costco0 -
Then your company is getting ripped off. For example, Netpay will charge you 0.685% for credit card payments.
Yep and machine rental and minimum monthly service fees....Why should the customer suffer because you can't be bothered to shop around?
I rather like the principle that it is for the customer to shop around if they don't like what's offered.0 -
This thread has got me so incensed because whilst there may be some unscrupulous companies out there over-charging for credit card payments, the vast majority DO NOT and in fact many undercharge and are very clear and upfront about them, like ourselves. This assumption that decent firms - usually small firms - are "ripping people off" is very, very wrong and very damaging, and this website isn't doing anything to relay the true picture.
We are charged 2.3692% on every Visa credit card payment we take, and 2.2936% on every Mastercard payment we take, PLUS we are charged a monthly fee of around £50+VAT on top. We are charged 0.69080% for processing debit cards. So, for a holiday costing £350 paid by Visa credit card, we have to pay to our card services provider an additional fee of £8.2922. For a holiday costing £2000, we have to pay an additional fee of £47.384. We charge a 2% fee to our customers paying by credit card and nothing to those paying by debit card, which you can see does not actually cover the cost to us of processing that payment, so we are funding part of the cost of processing credit cards and the FULL cost of processing debit cards.
Consumers have been lead to believe that the fees charged are going straight into the pockets of the retailers, but that's not the case at all. Using credit cards can cost consumers nothing if they pay their balance off at the end of each month (which many savvy people do - it can give you up to 6 weeks completely free credit!), and it costs most people nothing for their banking so using their debit card has no cost either. Ultimately the banks have to make their money somewhere for providing the card services and this is how they do it but people don't actually stop to think about this!!
It's very unfair that businesses have to pay this cost and I certainly object strongly to the suggestion that my business is "ripping" anyone off - far from it. The cost of processing card payments is an amount equivalent to 1/3rd of our annual profits - a substantial sum. The consumer will now have to pay it in other ways, in our case we have had to take steps to recoup this via other charges and an increase in the cost of our products and services.
I find it highly ironic that the 2% surcharge we clearly advertise that applies to our customers paying by credit card is totally up-front, honest and transparent, and yet we will now have to find other ways of recovering this cost that will end up being FAR from clear and transparent! The customer will still have to pay it but won't be able to see it as it will be added onto other costs and services - that's irony for you!
All of our competitors are in the same boat sadly, as every business in the UK and EU, so I expect everyone will raise their prices. The consumer loses out in the end from yet another ill-thought out EU law and I expect we will see more spending on credit cards than ever before after January 2018 - which isn't good for the consumer's financial health.
What they SHOULD have done is control the charges the card processing companies can charge businesses. They brought some control into place for interchange fees but they are the fees charged between the card processing companies and the banks - NOT the charges they levy to the retailers, so there is no benefit from that to anyone but the card processing companies!0 -
Brilliant post that sums it up nicely. The change takes away choice.
Unfortunately, on MSE, any regulatory intervention that gives the consumer an immediate visible benefit is lauded - when really the picture is more complex.
Whether you are a business person, a banker, a lawyer or a landlord.. don't expect any sympathy here.0 -
This thread has got me so incensed because whilst there may be some unscrupulous companies out there over-charging for credit card payments, the vast majority DO NOT and in fact many undercharge and are very clear and upfront about them, like ourselves. This assumption that decent firms - usually small firms - are "ripping people off" is very, very wrong and very damaging, and this website isn't doing anything to relay the true picture.
We are charged 2.3692% on every Visa credit card payment we take, and 2.2936% on every Mastercard payment we take, PLUS we are charged a monthly fee of around £50+VAT on top. We are charged 0.69080% for processing debit cards. So, for a holiday costing £350 paid by Visa credit card, we have to pay to our card services provider an additional fee of £8.2922. For a holiday costing £2000, we have to pay an additional fee of £47.384. We charge a 2% fee to our customers paying by credit card and nothing to those paying by debit card, which you can see does not actually cover the cost to us of processing that payment, so we are funding part of the cost of processing credit cards and the FULL cost of processing debit cards.
Consumers have been lead to believe that the fees charged are going straight into the pockets of the retailers, but that's not the case at all. Using credit cards can cost consumers nothing if they pay their balance off at the end of each month (which many savvy people do - it can give you up to 6 weeks completely free credit!), and it costs most people nothing for their banking so using their debit card has no cost either. Ultimately the banks have to make their money somewhere for providing the card services and this is how they do it but people don't actually stop to think about this!!
It's very unfair that businesses have to pay this cost and I certainly object strongly to the suggestion that my business is "ripping" anyone off - far from it. The cost of processing card payments is an amount equivalent to 1/3rd of our annual profits - a substantial sum. The consumer will now have to pay it in other ways, in our case we have had to take steps to recoup this via other charges and an increase in the cost of our products and services.
I find it highly ironic that the 2% surcharge we clearly advertise that applies to our customers paying by credit card is totally up-front, honest and transparent, and yet we will now have to find other ways of recovering this cost that will end up being FAR from clear and transparent! The customer will still have to pay it but won't be able to see it as it will be added onto other costs and services - that's irony for you!
All of our competitors are in the same boat sadly, as every business in the UK and EU, so I expect everyone will raise their prices. The consumer loses out in the end from yet another ill-thought out EU law and I expect we will see more spending on credit cards than ever before after January 2018 - which isn't good for the consumer's financial health.
What they SHOULD have done is control the charges the card processing companies can charge businesses. They brought some control into place for interchange fees but they are the fees charged between the card processing companies and the banks - NOT the charges they levy to the retailers, so there is no benefit from that to anyone but the card processing companies!
then it's you being ripped off by your card processing company, considering anyone can get rates at 0.699% for credit cards and 0.499% for debit cards, and £50 for a terminal? christ, talk about getting dry humped
https://www.netpay.co.uk/booker
Maybe you'd like to name and shame the rip off card company you are using.0 -
then it's you being ripped off by your card processing company, considering anyone can get rates at 0.699% for credit cards and 0.499% for debit cards, and £50 for a terminal? christ, talk about getting dry humped
https://www.netpay.co.uk/booker
Maybe you'd like to name and shame the rip off card company you are using.
Seems you've not read the small print. Perhaps you've never dealt with the company and just did a google? £15/month min service charge. Pricing doesn't apply to "online" (ie cardholder not present) orders.... which I suspect is the majority of business for many small companies.0 -
Just out of interest, did your card acquirer reduce their charges to you following the introduction of the interchange cap? Have you shopped around for acquirers who were willing to share more of their savings arising from that (although I do appreciate that changing acquirers isn't a simple straightforward process)?What they SHOULD have done is control the charges the card processing companies can charge businesses. They brought some control into place for interchange fees but they are the fees charged between the card processing companies and the banks - NOT the charges they levy to the retailers, so there is no benefit from that to anyone but the card processing companies!
I entirely agree with you that the views of many on this are both uninformed and unhelpful, and have previously moaned about how MSE editorial staff perpetuate the myth that interchange charges are what the retailer pays!0 -
chattychappy wrote: »
Whether you are a business person, a banker, a lawyer or a landlord.. don't expect any sympathy here.
Well that's a very deserving list, I think it's outrageous they won't get any sympathy........0 -
Very altruistic not passing on the full amount of the fee to the customer. I am sure you would much rather be paid in cash because that is absolutely free to handle
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