The MattLG Method - possible new scam

MattLG

Halifax is now giving 1% cashback on all purchases using it's new debit card. The processing charges for shops accepting debit cards however is not based on percentages, it's a fixed rate, usually 35p or 50p depending on the service provider.

So, here's the scam. Open the Halifax account and stick all the stoozed money in it that you can. Create a merchant account accepting debit cards. Buy something from yourself that just happens to cost the full amount of cash you have in the bank and collect the 1% cashback, paying only 35p in processing fees.
Put the money back into the account.
Repeat until rich enough to retire.

On £10,000 you would make £99.65 per transaction.

I've not read their terms and conditions so they may have thought of a way of stopping this. Can anybody see a flaw in this plan?

MattLG

zcaprd7

I think the merchant fees are % based?

Maybe you could use Nochex or something like that (lower fees)?


EDIT: Also I think there is a limit (£10k) per year?

MattLG

Nah, they're definitely fixed rates for debit cards :-)

The 10K limit would seem to be the flaw that stops me getting too rich though. :-(

MattLG

Pricy147

sorry or my ignorance - but what is a merchant account, and where do you apply for one??? is this similar to PayPal?

MattLG

A merchant account is basically a way of accepting debit and credit cards. Paypal is one way of doing it. Does paypal charge for non-commercial transactions? If not, this could be an even more profitable way of doing it.

It appears the 10K limit isn't absolute. The cashback just drops to 0.1% above 10K so on your 10k transaction you'd only be making £9.65 a time.

Still, you'd only need about a million pounds in transactions each month to be able to live off this scheme.

MattLG

MattLG

I've just checked out paypal and they appear to charge a percentage rate even for debit cards so paypal won't work. It will have to be a more legitimate card processing authority.

MattLG

Anon

I believe that this is not moneysaving as it is setting out to defraud and is therefore not in the spirit of this site.

Anon

Pricy147

do you have the details of the merchant account that only charges 35p??? Web site, etc?

Rafter

Anon,

Agree with you that is not moneysaving but it isn't fraud either. It is just exploiting the halifax deal which can costs more in cashback than the fee they are receiving and therefore only works for them financially by charging non money saving mugs more for their overdrafts and other services they might buy from the Halifax.

I think you will find that although the cost per transaction is only 35p, by the time you have got the equipment and a merchant account you are unlikely to make any money out of this scam.

MattLG

It's definitely not fraud.

How is stoozing in the spirit of the site but this scheme is not? This scheme is just an extension of stoozing.

I agree there are costs involved in getting a merchant account so you'll have to weigh up the costs and benefits. But for people like me who already have a merchant account to run their business, the costs are already taken care of :-)

MattLG

smartsaver

I see no difference to this and stoozing. It is just making use of loopholes offered by banks. Good on yer... ;-) I am the only one who can't get smileys into the text ???