Credit card query paying for drinks

older_wiser

Went out for a pint and a drink at the weekend i used a credit card to buy the drinks only came to 6 pounds or so. The barman said he'll put it through as 10 pounds and gave me the change. I can understand why he did that as the pub might lose money on small purchases using a credit card but I've never actually had that happen to me before is what he did legal ?

HappyMJ

Well yes legal in that it is not illegal but it's against the rules of the CC transaction provider. He could any time he or a customer wants cash just put a cash advance through as a purchase but if he was found out as doing that he would probably lose the machine or be charged extra fees.

Ben8282

Was any explanation offered as to why? If you didn't like his suggestion you could always have said no or asked why.

Could it be that this pub has a minimum £10 transaction for cards and he was doing you a favour to help you out and get round the rule imposed by his boss without getting himself into trouble?

older_wiser

Yes Ben your probably right it's not a pub i normally go in and i don't usually buy drinks on credit cards so i wasn't sure if certain pubs did this on a regular basis.

tomsco

I think the story here is you got a round of drinks for six quid! I wanna be there.

older_wiser

lol it was only two of us i actually thought the prices were higher than normal:rotfl: but it was a small family owned pub out in the countryside so prices will be higher.

Road_Hog

HappyMJ wrote: »

Well yes legal in that it is not illegal but it's against the rules of the CC transaction provider.

My understanding is that it is illegal and this is the reason that companies do not offer cashback on credit cards.

My landlord at the a local village pub used to offer it for regulars. I asked him how come he offered but nowhere else did. He said that it was nothing to do with the small % charge, because it was still cheaper than banking it, but because by giving cash out of a credit card you were in fact creating a loan and the business would need a credit licence to legally do that and create a credit agreement.

InsideInsurance

People really do use the term "illegal" massively too much on this site!!! Would love the name of one shop keeper that has been sent to prison for it?

It will probably breach the terms of their contract. but that is a matter between them and their merchant services providers.

Merchants pay fees on transactions, unless you are a large user of card transactions then for credit cards this is normally a combination of both a fixed fee and a percentage of the transaction. For debit cards it is normally just a flat per transaction fee irrespective of the amount.

Generally then for small transactions the fees represent a disproportional percentage of the monies involved. By putting through more and giving you cashback they reduce the overall proportion with some hope that if you have an extra few quid in your pocket that you decide to spend that there too. Companies generally want to get rid of cash as well which is a pain to have to deal with (cashing up, security, banking, insurances etc).

Credit card companies on the other hand charge you a greater interest rate for cash advances and so they dont want merchants masking the fact this is what they are doing as it is depriving them of revenue

tomsco

InsideInsurance wrote: »

People really do use the term "illegal" massively too much on this site!!! Would love the name of one shop keeper that has been sent to prison for it?

It will probably breach the terms of their contract. but that is a matter between them and their merchant services providers.

Last time I checked, breaching the terms of a contract is illegal. You wouldn't see people thrown in gaol though as it would be a civil matter, not a criminal matter.

sharpy2010

InsideInsurance wrote: »

People really do use the term "illegal" massively too much on this site!!!

Unfortunately most people don't understand the difference between illegal and unlawful, and this is the reason that the term is overused.

InsideInsurance

tomsco wrote: »

Last time I checked, breaching the terms of a contract is illegal..

I suggest you check again then, for something to be "illegal" it needs to break a law/ statute/ regulation. Breach of contract in itself is not a breach of law, though evidently there are somethings that will be both (eg stealing from your employer)