surcharges when using credit cards

phlipper

Can you tell me why some travel companies impose a % surcharge when paying for a trip using a credit card? Is it legal?

CLAPTON

can't help with the first
but yes it's legal

exel1966

The travel companies/retailers are recovering the costs charged by VISA/AMEX/Mastercard etc for the use of the card service. The retailer will typically be charged anywhere between 1.75% and 4.00% every time they accept a card for payment.

Many retailers will already incorporate these charges into the the RRP, but some will also add a mark-up, Ryanair being a prime example !

There is currently NO leglislation to prevent retailers from charging for this service.

PROLIANT

This boils down to the good old days when merchant terminals used dial-up modems and cost them a phone call plus merchant fee for processing the card, times have moved on since but some greedy retailers have not, plastic is the new cash and retailers need reminding that cash will soon be phased out below the grass, more and more people use card for payment.

jamalfatty

You'll find most if not all retailers will pass these charges on to you, but then they will also reduce what the goods actually cost by a similar %age so you end up paying what you expect (if your stuck in a queue, have a look at some of the small print that is plastered about)

Travel & Car retailers in particular dont tend to reduce what you pay and so pass the charge on in full

NickX

jamalfatty wrote: »

You'll find most if not all retailers will pass these charges on to you, but then they will also reduce what the goods actually cost by a similar %age so you end up paying what you expect

This isn't really true because in a supermarket for instance you pay the same amount whether you pay by cash or credit card.

It does tend to be Travel Agents, Airlines and Car Dealers that add the charges because these tend to be high value items.

Ryanair's policy of duplicating the charge for each traveller and each flight leg within a single transaction is bordering on the criminal IMO.

simongregson

Large supermarkets will include an amount to offset the costs of card processing in their prices, so in effect you pay more. However, I would imagine the large supermarkets have negotiated very low processing fees due to their volume of transactions and the importance of them accepting cards without fees to the card companies.

Generally debit cards cost the shop a set fee per transaction, around 12 - 40p for independent shops. Credit cards charge a % of the amount, generally around 2% for independent shops.

If you run a high value low-margin business, for example selling flights where you might only make £10 profit on a sale of £1000 say, you have a problem with accepting credit cards without a fee, as the cost to you will wipe out your profit, but obviously people want to pay by credit cards for these transactions to give them protection if the airline goes bust. You could pay £100 on your credit card with the fee, and the rest by debit card, you would still be protected for the full amount.

Ryanair's charges are part of their way of reducing headline fares. In order to advertise a fare, someone has to be able to buy it. Guess what - Ryanair pick the card which fewest people actually have, visa electron. These actually cost the same to process as Visa debit cards, and the cost to the airline is probably no more than 50p per booking, not per passenger per flight! Obviously people need to compare the final price of their flights, but the objection has to be that it is Ryanair's low headline price that drives traffic to their website, so their advertising is misleading.

It will be interesting to see what happens to flight prices as Visa electron cards seem to be gradually withdrawn and replaced with visa debit branded cards. In ireland it is not possible to obtain a visa electron card linked to a bank account, and I think it is only a matter of time before Ryan air's headline prices are challenged by the EU.

jamalfatty

NickX wrote: »

This isn't really true because in a supermarket for instance you pay the same amount whether you pay by cash or credit card.
.

Which if you read my post is exactly what I said!

NickX

jamalfatty wrote: »

Which if you read my post is exactly what I said!

I did read your post but I would call "passing the charge onto the customer" meaning that you pay more if you pay by Credit Card than if you pay by cash. At most high street shops this is not the case.

simongregson

jamalfatty wrote: »

You'll find most if not all retailers will pass these charges on to you, but then they will also reduce what the goods actually cost by a similar %age so you end up paying what you expect (if your stuck in a queue, have a look at some of the small print that is plastered about)

This is actually a (legal) tax dodge as there is no VAT applicable to processing charges, so cuts the shop's tax bill.

jamalfatty

NickX wrote: »

I did read your post but I would call "passing the charge onto the customer" meaning that you pay more if you pay by Credit Card than if you pay by cash. At most high street shops this is not the case.

the

........and then they reduce your shopping by a similar amount so you do actually pay the surcharge, but only hand over the same amount of money as if you gave them cold hard cash.

Lots of businesses, and I would guess the majority of major retailers use this practice