Minimum Spend for Debit Card Payments

boliston

Anihilator wrote: »

Tbh why should a shop have to pay 2.5% for your convenience or whatever when your spending pennies.

Also 2.5% of "pennies" is going to be practically no cost at all to the shop so I can't understand why they should worry about low value transactions on a CREDIT card (as opposed to a debit card which is obviously not cost effective on small transactions)

Ivory_Tinkler

It may not be 2.5% for a small shop - they might actually have to pay more than that, it would depend on the rate that has been negotiated with their merchant bank.

boliston

Ivory_Tinkler wrote: »

It may not be 2.5% for a small shop - they might actually have to pay more than that, it would depend on the rate that has been negotiated with their merchant bank.

Probably nearer 3% for a small shop that has only recently started trading, but even 3% of pennies is going to be VERY small (eg 1.5p on a 50p transaction for example). If they were REALLY worried about their pennies they could just add say 2p onto the cost of the purchase!

cyberbob

boliston wrote: »

If they were REALLY worried about their pennies they could just add say 2p onto the cost of the purchase!

Therefore penalising those who pay cash!

boliston

cyberbob wrote: »

Therefore penalising those who pay cash!

I meant they could add 2p at the till for the card payment method rather than add it to the shelf price so cash buyers are not affected.

Lifeisbutadream

boliston wrote: »

The last time I encountered this rule was buying a pair of gloves at a small shop/cafe next to the sea. They had taken the label tags off the gloves as I wanted to wear them and I handed over my credit card for £7 I think and they said sorry it has to be £10 for cards.

I explained that credit cards are charged as a percentage and not a fixed fee like debit cards but the lady seemed a bit too thick to understand any of this so I just told her to keep the gloves.

Actually thats not true, it is a set amount for debit cards and a percentage for credit cards, which is why you are sometimes charged extra for paying on credit card.

The minimum spend is so that they can absorb the cost - I think it is around 30p for a debit card, so there would be no point in taking a card payment of £1 and paying 30p charges. £5 or £10 sound reasonable, especially for a smaller business.

So your shop assistant probably wasnt as thick as you told her she was.;)

Lifeisbutadream

Come to think of it, I have a feeling that there is a set charge plus a % for credit cards.

boliston

Lifeisbutadream wrote: »

Actually thats not true, it is a set amount for debit cards and a percentage for credit cards, which is why you are sometimes charged extra for paying on credit card.

The minimum spend is so that they can absorb the cost - I think it is around 30p for a debit card, so there would be no point in taking a card payment of £1 and paying 30p charges. £5 or £10 sound reasonable, especially for a smaller business.

So your shop assistant probably wasnt as thick as you told her she was.;)

I was trying to use a CREDIT card to buy the gloves so she would have paid a percentage rather than a fixed fee, and for a low value transaction this means credit cards ARE cost effective for the retailer. It would make far more sense if the sign said "No DEBIT cards for transactions below £10".

Lifeisbutadream

boliston wrote: »

I was trying to use a CREDIT card to buy the gloves so she would have paid a percentage rather than a fixed fee, and for a low value transaction this means credit cards ARE cost effective for the retailer. It would make far more sense if the sign said "No DEBIT cards for transactions below £10".

Which if you read my other post, I think has a set charge as well as a percentage.

But even if it was a percentage, lower priced items do not have as much of a profit margin in, so it is quite understandable why they would choose a price limit as a minimum and stick to it.

Bowling_4_Gold

There are many costs assosciated with accepting and processing cards for retailers, e.g. here are HSBC's basic charges for businesses turning over from £0-£50,000+

• £250 one – off set up charge.
• 2% of every credit card transaction.
• 25p for every debit card transaction.
• 2% of every non-UK debit & credit card transaction.
• No terminal rental for 12 months.* (normally around £18 pm)

*This relates to one standard terminal.

So it is quite expensive, and I don't criticise any smaller businesses for charging their customers for the privelege (sp.?) (says the guy who often spends 35p on a card in Tesco )