MSE News: Government to ban debit and credit card surcharges

opinions4u

zagfles wrote: »

Nothing. And nor should there be.

If you think that will defeat the purpose of these proposals then you haven't understood the point of them.

You're absolutely right. I don't understand the point of them.

Let me set my point of view out, as it's very simple.

Retailers should not be able to charge different prices for accepting different payment methods. End of.

If American Express has high retailer charges, the retailer could simply refuse to accept AMEX. It's a business decision as to how much trade they will lose v cost of accepting AMEX that is for that retailer to judge.

Same with Visa and Mastercard v debit card, or any other payment method.

The current rules are actually quite transparent (although the practice of only making payment method surcharges clear at the end of a transaction is wrong). You can clearly see the cost before you hit the "purchase now" button. So this isn't about transparency at all.

So I would go back to the pre-1990 world where any surcharges linked to payment type were not allowed.

If there's an issue with transaction costs, take it up with the system that sets the charges for Visa and Mastercard. Is this competitive enough?

Fannying about with multiple charges for different payment types at the checkout isn't how things should work.

chattychappy

opinions4u wrote: »

Fannying about with multiple charges for different payment types at the checkout isn't how things should work.

I think the ability for retailers to offer different prices depending on payment method is a good protection against overcharging by credit cards. In a previous life I used to publish a price list. 3 simple columns: "Cash" (meant cleared funds/debit card/cheque with order from people we knew), "Credit card" (+4%, roughly the fee we paid at the time, discounted a little), "30-day account" (+2% - to approved customers only).

Everybody was happy with that. I had the facility for people who wanted to pay by CC. At the same time, people who could stump up the cash got the benefit of that. The profit margins were often less than 10%.

Barclays Merchant Services pointed me to their T+Cs which forbade this, and I pointed them to the law that prevented them from enforcing it. After a bit of discussion they reduced their fee and we dropped to a two tier pricing - still offering a discount for cash.

The banks have a lot of power over retailers and CC acceptance is a serious cost. If customer and retailer agree to avoid using CCs, then I think they should be free to set a different price - either by way of discount or surcharge.

Come to think of it, whilst consumers might at first applaud this change, I think it is the banks that are the real winners.

NFH

pqrdef wrote: »

It's just like the free gift with £9.95 p&p trick. Limit them to honest p&p and there's no free gift.

That practice is already outlawed by Schedule 1 Regulation 20 of the Consumer Protection from Unfair Trading Regulations 2008. If the price exceeds the "the unavoidable cost of responding to the commercial practice and collecting or paying for delivery of the item", then it is unlawful.

zagfles

opinions4u wrote: »

You're absolutely right. I don't understand the point of them.

Let me set my point of view out, as it's very simple.

Retailers should not be able to charge different prices for accepting different payment methods. End of.

Then why do you object to these proposals? That's what they're likely to lead to (they allow CC charges to reflect the extra cost - but as that's only 1-2% many retailers who charge now probably won't bother).

If American Express has high retailer charges, the retailer could simply refuse to accept AMEX. It's a business decision as to how much trade they will lose v cost of accepting AMEX that is for that retailer to judge.

Same with Visa and Mastercard v debit card, or any other payment method.

If the retailer has tight margins it may be fair enough to let them pass on the CC charge - most people have debit cards as well so could always chose to pay by debit card to avoid the CC charge.

The current rules are actually quite transparent (although the practice of only making payment method surcharges clear at the end of a transaction is wrong).

Well that is what these proposals are about!!

I've just been on the Ryanair website to book a trip to Sweden for 4 of us - bargain at £80 return. You go through the entire booking process, adding the passenger names, declining baggage etc, and right at the end you're told there's an additional £48 to pay in "admin fees" as I haven't got a RyanAir MasterCard. Over 50% increase in fare.

All I want is a bit more honesty - what you said was fine - the fare is £128 with a £48 discount with a RyainAir mastercard.

Fannying about with multiple charges for different payment types at the checkout isn't how things should work.

That's what we have now. As above. These proposals will mean less of it.

zagfles

chattychappy wrote: »

I think the ability for retailers to offer different prices depending on payment method is a good protection against overcharging by credit cards. In a previous life I used to publish a price list. 3 simple columns: "Cash" (meant cleared funds/debit card/cheque with order from people we knew), "Credit card" (+4%, roughly the fee we paid at the time, discounted a little), "30-day account" (+2% - to approved customers only).

Everybody was happy with that. I had the facility for people who wanted to pay by CC. At the same time, people who could stump up the cash got the benefit of that. The profit margins were often less than 10%.

Barclays Merchant Services pointed me to their T+Cs which forbade this, and I pointed them to the law that prevented them from enforcing it. After a bit of discussion they reduced their fee and we dropped to a two tier pricing - still offering a discount for cash.

The banks have a lot of power over retailers and CC acceptance is a serious cost. If customer and retailer agree to avoid using CCs, then I think they should be free to set a different price - either by way of discount or surcharge.

Come to think of it, whilst consumers might at first applaud this change, I think it is the banks that are the real winners.

Why? Retailers will still be allowed to pass on the extra cost to them of using a credit card. So how are the banks "winners"?

zagfles

chattychappy wrote: »

And where would it end? Should restaurants be stopped from overcharging for drink in order to keep set-menu prices down?

Only if buying a drink is compulsory.

Starbucks forced to "justify" why their coffee is so much more than their material cost?

They display their (rip-off) prices clearly. It's not like they display 50p for a coffee and then charge £2 for the hire of the cup.

The (greedy, of course) hotel I'm currently sitting in will charge me US$3 for taking the can of Tiger from the fridge or US$4 a minute if I use the phone to call the UK. I'm happy that they can choose to offer that - and I will turn it down. But I don't want that choice taken away from me.

Note the word "choice". You DON'T HAVE to take a can from the fridge.

You DO HAVE to use a card to pay for a flight online.

What about inflated delivery charges - will suppliers have to "justify" that a product really did cost a certain amount to deliver in order not to leave themselves open to a claim?

As for morality - I can only address it this way. What a consenting consumer and supplier agree to is their own business. It would be immoral (and illegal) if having drunk the $3 beer it turned out to be fake, or the pricing wasn't clear.

THAT is what this is all about. Clear pricing. Nothing else. I want to know my flight will cost £128 upfront, not be given a price of £80 until I've gone through the entire booking process.

NFH

Section 2(c)(iv) of the Terms and Conditions for American Express Card Acceptance prevents retailers from imposing "any restrictions, conditions, or disadvantages when the Card is accepted that are not imposed equally on all other credit and charge cards"; in practice this means that retailers cannot charge more to accept Amex cards than to accept other types of credit cards. This condition does not fall foul of the Credit Cards (Price Discrimination) Order 1990, the legislation that forbids card networks from contractually preventing retailers from adding surcharges. I hope that the forthcoming legislation next year will not result in Amex customers paying more than Visa and MasterCard credit card holders. In this regard, I prefer the status quo.

vax2002

Business is already well in front here .
Out go card surcharges
In come Admin charges.
Another poorly thought out scheme from the twits of Westminster

NFH

vax2002 wrote: »

Business is already well in front here .
Out go card surcharges
In come Admin charges.
Another poorly thought out scheme from the twits of Westminster

That comment is a bit premature. They haven't even written the legislation yet. I'm sure that when the bill comes to committee stage in the Commons and Lords, this kind of practice will be closely scrutinised if the government lawyers haven't already come up with suitable wording by then.

chattychappy

zagfles wrote: »

Why? Retailers will still be allowed to pass on the extra cost to them of using a credit card. So how are the banks "winners"?

Because they will be in the privileged position of having their component passed through to a consumer without being marked up.

zagfles wrote: »

They display their (rip-off) prices clearly. It's not like they display 50p for a coffee and then charge £2 for the hire of the cup.
...

THAT is what this is all about. Clear pricing. Nothing else. I want to know my flight will cost £128 upfront, not be given a price of £80 until I've gone through the entire booking process.

I agree with this part - the pricing should be clear and upfront. But if it is, I don't see the problem of charging what they like for the CC surcharge.