Should we get a discount?

Rafter

Al_Mac wrote:

Can't remember the wording. Was something to do with paying a fee for credit, fairly sure. But I can see how it would be a way of avoiding VAT;)

VAT is payable on many grocery items. VAT is not payable on financial services.

By treating 2.5% of your tesco bill as 'financial services' the retailer avoids paying VAT on that bit.

May not sound a big deal but if the retailer does this on £10 billion of sales they save £44 million in TAX. HM Revenue and Customs I think now have a ruling to close this loophole.

Wading in to the wider debate, retailers have choice about whether they want to accept credit cards or not, and whether they want to charge a fee for doing so.

Is it fair that people who pay by cash or debit should pay a higher price for goods to cover the charges from Amex, VISA etc? Probably not, but the retailer gets extra sales by accepting credit cards and does save on the costs of holding cash as already pointed out.

For as long as us (the customers) want buy now pay next month benefits of a credit card and cashback and other incentives though, someone has to pay. That is either the retailers or other bank customers who pay higher rates of interest.

Evidence from Australia (where the fees the retailers pay have been reduced by law) is that people have to pay fees for credit cards, get less card benefits and retailers havn't reduced prices despite saving card fee charges of around £350 million a year. Doesn't sound like the best outcome either.

R.