Charges for using credit card

Maldives_lover

Can anyone explain to me why companies can charge for taking credit card payments? I have just paid a holiday deposit and been charged 2.25% because I paid with credit card, but I thought companies couldn't charge different prices for cash and credit card payments, surely this is the same thing

benf90

They are charged a fee when they process credit cards, so they're passing this on to you.

There's probably also more admin costs associated with credit card payments, particularly if they're later disputed by a customer.

Most shops just factor these costs into their prices. When it comes to large purchases like travel and cars etc they keep the basic prices low to remain competitive.

It's up to them whether they charge for taking a credit card payment, and up to you which payment method you use.

simon_templar_2

If the OP had paid cash they would not have incurred the credit card surcharge.

Dawny_D

Hi,
Im after some advice regarding balance transfers.

I currently have a balance of 1200 on virgin,which id previously transferred from alliance and Leicester,as my 0% period was up,when i went to do the balance transfer,i was told i couldent as both were owned my mbna,but i could have a cash transfer into my bank,which i used to pay the balance on a&l,what i wasnt told that a cash transfer is more costly,i am now being charged £16 a month interest,i pay £50 a month off on virgin,but with that interest,im only paying £3o something off,i have since looked to transfer again,i was refused by egg,and was approved by halifax,but they would only give me a limit of £350,so dident use that,i have applied for my own bank's credit card which is Hsbc,i was declined.
im now wondering what to do next,i havent a huge balance,but want to try and clear it this year.
my account is clear,i did have an overdraft,but have since cleared with a loan,my bank did say to apply again in 3 months as my bank account would look better.
i also want to add i no longer use the credit card,i just want to pay it off.
any advice would be gratefully recieved.
with thanks in advance

Dawny D

CLAPTON

Maldives_lover wrote: »

Can anyone explain to me why companies can charge for taking credit card payments? I have just paid a holiday deposit and been charged 2.25% because I paid with credit card, but I thought companies couldn't charge different prices for cash and credit card payments, surely this is the same thing

The answer to your question is that it is completely legal to charge different prices for different payment methods.

so some charge more for CC payments, some give discounts for payment by DD etc.

PNPSUKNET

even our local council charges £2.50 for credit cards, it costs them about 50p plus a percentage to process.

never-in-doubt

Companies that have merchant processing get charged by the facilitator or bank that supplied the facility.

This works as follows:

Debit card payments - cost the retailer a set amount in pence for taking payment (usually 10p - 80p)

Credit card payments - cost the retailer a set percentage of total sale for taking payment (typically 1-3%) so they can and do pass this back to he customer. Most retailers take the debit card fee (quite small) on the chin but with a CC charging as much as 3% in some cases, it soon adds up.

i.e. Spend a grand and pay using debit card the retailer may get a 30p charge. The same for a credit card could be as much as £30.

bert&ernie

Incidentally, not only is it legal for merchants to charge a fee for accepting a card, the practice is explicitly protected under UK law.

Card schemes (Visa, Mastercard etc.) have never been keen on merchants charging fees to customers - thereby making the cost of using the card transparent. In some jurisdictions the scheme rules ban surcharges. However, such a ban is explicitly prohibited under UK law.

In my view this is fair enough. Why shouldn't the cost of paying by card be passed on to the cardholders? The alternative is that the costs are built into base prices and we all pay them.

never-in-doubt

bert&ernie wrote: »

Incidentally, not only is it legal for merchants to charge a fee for accepting a card, the practice is explicitly protected under UK law.

Card schemes (Visa, Mastercard etc.) have never been keen on merchants charging fees to customers - thereby making the cost of using the card transparent. In some jurisdictions the scheme rules ban surcharges. However, such a ban is explicitly prohibited under UK law.

In my view this is fair enough. Why shouldn't the cost of paying by card be passed on to the cardholders? The alternative is that the costs are built into base prices and we all pay them.

I agree with that sentiment..... i'd rather choose to save £30 per £1k through choice as opposed to it being built in the overall cost.....

But whenever I pay for a holiday I use debit card, however paying the deposit by CC would give you s.75 coverage so may be worth paying the deposit with CC and the rest with debit card which will be free.....