Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@. Skimlinks & other affiliated links are turned on

Search
  • FIRST POST
    • curtis122
    • By curtis122 19th Jul 17, 6:04 PM
    • 57Posts
    • 17Thanks
    curtis122
    Card processing fee
    • #1
    • 19th Jul 17, 6:04 PM
    Card processing fee 19th Jul 17 at 6:04 PM
    I have read they are scrapping these come Jan next year but annoyingly I have to pay the outstanding charge for my holiday before then.


    Their charge is 2% the total amount. As the outstanding amount to be paid is £6k that will be a charge of £150 this cannot be how much it cost to make a process a transaction charge.


    It does not say anywhere 'up to' a certain amount for the charge so I'm assuming this will be what I will have to pay ! Is this correct can they do it on the whole amount?
Page 1
    • zx81
    • By zx81 19th Jul 17, 6:06 PM
    • 14,042 Posts
    • 14,721 Thanks
    zx81
    • #2
    • 19th Jul 17, 6:06 PM
    • #2
    • 19th Jul 17, 6:06 PM
    As the outstanding amount to be paid is £6k that will be a charge of £150 this cannot be how much it cost to make a process a transaction charge.
    Originally posted by curtis122
    It can be.

    It's correct that it's charged on the full amount.

    If you have the savings, pay some on the card, and the rest by other means to reduce the total fee.
    • curtis122
    • By curtis122 19th Jul 17, 6:36 PM
    • 57 Posts
    • 17 Thanks
    curtis122
    • #3
    • 19th Jul 17, 6:36 PM
    • #3
    • 19th Jul 17, 6:36 PM
    I thought they were not allowed to make a profit on these fees surely that much is well over the actually cost??
    • zx81
    • By zx81 19th Jul 17, 6:40 PM
    • 14,042 Posts
    • 14,721 Thanks
    zx81
    • #4
    • 19th Jul 17, 6:40 PM
    • #4
    • 19th Jul 17, 6:40 PM
    You're right that they can't make a profit.

    But we don't know what costs are making up the fee. From experience, it's certainly possible that 2% is an accurate reflection.
    • curtis122
    • By curtis122 19th Jul 17, 6:47 PM
    • 57 Posts
    • 17 Thanks
    curtis122
    • #5
    • 19th Jul 17, 6:47 PM
    • #5
    • 19th Jul 17, 6:47 PM
    but its 2% regardless of cost if you use a credit card so how can this be fair if the cost was only £2000 then the charge will be £40 but as it cost £6k then its £150 so how can it be £110 more to do the same thing?? Just does not seem right other than a money making scheme.
    • zx81
    • By zx81 19th Jul 17, 6:55 PM
    • 14,042 Posts
    • 14,721 Thanks
    zx81
    • #6
    • 19th Jul 17, 6:55 PM
    • #6
    • 19th Jul 17, 6:55 PM
    Because elements of the fee are charged as a %, not a flat sum. Eg the merchant fee.

    A flat fee would mean that those spending less were subsidising those spending more.
    • wiseonesomeofthetime
    • By wiseonesomeofthetime 19th Jul 17, 7:22 PM
    • 127 Posts
    • 61 Thanks
    wiseonesomeofthetime
    • #7
    • 19th Jul 17, 7:22 PM
    • #7
    • 19th Jul 17, 7:22 PM
    Their charge is 2% the total amount. As the outstanding amount to be paid is £6k that will be a charge of £150 .....
    Originally posted by curtis122
    Not sure if you will see this as good news or not, however, 2% of £6,000 is £120, so you have already saved £30

    Or is the rate the even more ridiculous figure of 2.5%

    I avoid those fees by saving up for my holiday first, then paying for it.

    I know that is not the done way for many though.

    • bris
    • By bris 19th Jul 17, 7:24 PM
    • 7,027 Posts
    • 6,025 Thanks
    bris
    • #8
    • 19th Jul 17, 7:24 PM
    • #8
    • 19th Jul 17, 7:24 PM
    Debit cards such as switch charge a flat fee which is around 15p to 30P depending on the size of company and the amount of transactions they will take.


    Credit cards however charge a percentage of the total price from around 1% to 4% again depending on the turnover of the company involved. 2% is probably about right so it's a cost the merchant charges and not profit as you might like to think.


    When this becomes law the cost of the goods are just going to go up so in the end we will all pay for these costs anyway.
    • x_raphael_xx
    • By x_raphael_xx 19th Jul 17, 7:53 PM
    • 3,412 Posts
    • 17,225 Thanks
    x_raphael_xx
    • #9
    • 19th Jul 17, 7:53 PM
    • #9
    • 19th Jul 17, 7:53 PM
    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.
    Debt Free as of 17/01/2009 Turtle Power!!
    Nov NSD's - /25 / Lose weight 29.0 lbs / 30lbs
    EF Challenger #36 £1000/£5050
    • Parnott
    • By Parnott 20th Jul 17, 9:29 PM
    • 115 Posts
    • 284 Thanks
    Parnott
    The European Commission capped these fees over a year and both credit and debit cards are now (or should be charged as %) Any company claiming they still get charged 2% on a credit card should immediately be reviewing their facilities as they are probably making a turn on the processing.


    The card schemes levy 0.20% for debit and 0.30% for credit onto the acquirer who then has to add their margin. Anything over 0.50% as a debit surcharge and 1.00% for credit is the acquirer taking the proverbial. I'd personally challenge them and ask to see their merchant statement. They are not meant to penalise the cardholder for using their card but can legitimately pass on what they incur. It's an absolute racket!
    ------------------------------------------
    • eskbanker
    • By eskbanker 21st Jul 17, 12:45 AM
    • 5,776 Posts
    • 5,648 Thanks
    eskbanker
    The European Commission capped these fees over a year and both credit and debit cards are now (or should be charged as %) Any company claiming they still get charged 2% on a credit card should immediately be reviewing their facilities as they are probably making a turn on the processing.


    The card schemes levy 0.20% for debit and 0.30% for credit onto the acquirer who then has to add their margin. Anything over 0.50% as a debit surcharge and 1.00% for credit is the acquirer taking the proverbial. I'd personally challenge them and ask to see their merchant statement. They are not meant to penalise the cardholder for using their card but can legitimately pass on what they incur. It's an absolute racket!
    Originally posted by Parnott
    Who would you personally challenge (merchant or acquirer) and have you actually done so? If, for the sake of argument, doing so unearthed that an acquirer charged a merchant (say) 2% for credit card transactions, which would be perfectly legal, then what?
    • MallyGirl
    • By MallyGirl 21st Jul 17, 10:15 AM
    • 2,016 Posts
    • 6,828 Thanks
    MallyGirl
    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 unreasonable
    • rtho782
    • By rtho782 21st Jul 17, 1:05 PM
    • 1,011 Posts
    • 720 Thanks
    rtho782
    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.
    Originally posted by x_raphael_xx
    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/costco
    Deposit Saved since 01/12/15: £13,000 / £15,000 House Bought!

    Debt Cleared since 01/12/15: £6,000 / £7,500
    • chattychappy
    • By chattychappy 21st Jul 17, 10:25 PM
    • 6,393 Posts
    • 3,371 Thanks
    chattychappy
    Then your company is getting ripped off. For example, Netpay will charge you 0.685% for credit card payments.
    Originally posted by rtho782
    Yep and machine rental and minimum monthly service fees....

    Why should the customer suffer because you can't be bothered to shop around?
    Originally posted by rtho782
    I rather like the principle that it is for the customer to shop around if they don't like what's offered.
    • Elladings
    • By Elladings 10th Sep 17, 6:03 PM
    • 2 Posts
    • 7 Thanks
    Elladings
    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!
    • chattychappy
    • By chattychappy 10th Sep 17, 6:12 PM
    • 6,393 Posts
    • 3,371 Thanks
    chattychappy
    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.
    • tastyhog
    • By tastyhog 10th Sep 17, 6:29 PM
    • 144 Posts
    • 216 Thanks
    tastyhog
    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!
    Originally posted by Elladings

    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.
    • chattychappy
    • By chattychappy 10th Sep 17, 7:29 PM
    • 6,393 Posts
    • 3,371 Thanks
    chattychappy
    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.
    Originally posted by tastyhog
    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.
    Last edited by chattychappy; 10-09-2017 at 7:34 PM.
    • eskbanker
    • By eskbanker 10th Sep 17, 7:49 PM
    • 5,776 Posts
    • 5,648 Thanks
    eskbanker
    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!
    Originally posted by Elladings
    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)?

    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!
    • bigadaj
    • By bigadaj 10th Sep 17, 8:36 PM
    • 10,653 Posts
    • 6,957 Thanks
    bigadaj

    Whether you are a business person, a banker, a lawyer or a landlord.. don't expect any sympathy here.
    Originally posted by chattychappy
    Well that's a very deserving list, I think it's outrageous they won't get any sympathy........
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

3,585Posts Today

7,581Users online

Martin's Twitter