Why do we get charged for paying by CC?

rockvilla

Hi

I've just paid a charge of £58 on paying a holiday by credit card (mastercard). This has made me wonder why do we get such (seemingly) ridiculously high charges?

Regards

R

nomoneytoday

Because the holiday company have to pay a fee to the credit card company.
They are making it a little more transparent, as a debit card will be cheaper / free.

McKneff

You could have saved a lot my paying £1 by credit card and the rest by debit card, you protection would have been there then.

The cc companies charge this amount to the place you are buying from and they just pass it on (or raise their prices)

WestonDave

Because the tour operator will be being charged by their card terminal provider. Charges are usually something like 20p per transaction for a debit card but typically around 2or 3% of the value of the transaction on a credit card (which is why they often charge for credit cards but don't bother on debit cards). Where I work charges 3% on credit card payments for this reason. If you've paid a couple of thousand for your holiday it can easily cost the company £58 or more in card charges. Given that you could just as easily pay by debit card without them losing the money its fairer to charge like this in a transparent manner than simply whacking 3% on everything so debit card customers lose out.

The reason card companies do it, is because plenty of people just use credit cards as payment cards so they make no money, plus the money back guarantees that happen on credit cards have to be funded - before they make any profit.

rockvilla

Thanks for the replies folks, was just wondering why the charge was as high. I've previously bought high value items by cc and not been charged a fee at all!

Thanks again

R

stephenbalmer

McKneff wrote: »

You could have saved a lot my paying £1 by credit card and the rest by debit card, you protection would have been there then.

The cc companies charge this amount to the place you are buying from and they just pass it on (or raise their prices)

That's an interesting point McKneff. Is it possible to pay say £1 by cc and the rest by debit card and still benefit from the cc protection should anything go wrong?

Additionally, would the travel agent etc. not charge the £58 anyway since a cc is being used - i think most just add on a fixed cost per passenger if a cc is involved in any part of the payment?

Thanks,
Steve

Tixy

You still get the section 75 even if just a deposit or small amount is by credit card.

Depends on how/where you book. If you are in a shop they should only charge the fee on the part you pay by CC - its usually not possible if you buy/pay online.

chattychappy

rockvilla wrote: »

Thanks for the replies folks, was just wondering why the charge was as high. I've previously bought high value items by cc and not been charged a fee at all!

It typically comes down to margins rather than high/low value. If a retailer is making, say, 30% then to lose 2 or 3% of this is not significant. In fact it might work out well worth it. If they started charging 2 or 3% extra, they might have to handle more cash which can be expensive. CCs are fast - if you have someone standing there whilst a customer complains/fumbles for cash then this costs money. Staff costs, queues, other customers walk away etc.

But if your margin is only 5%, it's a different story. This is often the case for travel agents selling flight tickets, business to business trade sales etc.

stephenbalmer wrote: »

Additionally, would the travel agent etc. not charge the £58 anyway since a cc is being used - i think most just add on a fixed cost per passenger if a cc is involved in any part of the payment

If they are a "normal sensible" agent, then they won't be charging a fixed (high) charge. If they are, then it suggests the charge is, in part, just a way of making a profit as with low cost airlines (Ryanair etc).