Refunds and how shops deal with them

CG19a

I know with my experience of Tesco vat receipts, paying by card affects how much vat you paid. (at least it did about 5 years ago when I worked on customer services)

Example
£120 paid by cash - £20 vat paid. (£100 going to Tesco)

£120 paid by card (2.5% card processing fee off) = £117 paid , so vat on this would be £19.50 with £97.50 going to Tesco.

This may have changed, but this was also one of the reasons at the time why we generally always paid back onto a card.

munchpot

Thanks for all your replies. There was no particular reason for me to ask, although I do get annoyed when I buy something by card and they take the money from my account on the same day but it can take a week to get a refund.

withabix

But the shop doesn't get your money for upto a week either when you pay for something on your card....

Perhaps shops should insist that you pay for things in cash....

You can't have it both ways!

arcon5

CG19a wrote: »

I know with my experience of Tesco vat receipts, paying by card affects how much vat you paid. (at least it did about 5 years ago when I worked on customer services)

Example
£120 paid by cash - £20 vat paid. (£100 going to Tesco)

£120 paid by card (2.5% card processing fee off) = £117 paid , so vat on this would be £19.50 with £97.50 going to Tesco.

This may have changed, but this was also one of the reasons at the time why we generally always paid back onto a card.

I'm not sure if this is correct.

The consumer will pay VAT at the std rate on the order total. So if the sale price is £120 then VAT will be calculated on the whole amount (assuming of course the products aren't exempt or in a lower rate category).

In the same way as you also charge VAT on the postage charge you pass on to the customer, irrespective of whether you use RM or not, whom until recently didn't charge VAT on most of their products therefore nothing to claim back.

The payment processing fee is just a cost of doing business.

arcon5

withabix wrote: »

But the shop doesn't get your money for upto a week either when you pay for something on your card....

Perhaps shops should insist that you pay for things in cash....

You can't have it both ways!

But they do have the facility to initiate the refund straight away. But I do see your point, I think a lot of people don't realise this. In fact some industries may have a much longer payout structure depending on the risk the industry poses.

Or Google Checkout for example start merchants out on a 10 day scheme.

A lot of companies who don't have automatic accounting systems will run refund runs periodically as to ensure their accounts are kept up to date and accurate.

munchpot

withabix wrote: »

But the shop doesn't get your money for upto a week either when you pay for something on your card....

Perhaps shops should insist that you pay for things in cash....

You can't have it both ways!

I don't think it is having it both ways. If I pay by debit card on Tuesday lunchtime, when I check my account the next day the money has been taken. Therefore they should operate the same way and refund in the same period of time in which they debit.

If they did I wouldn't be asking the question as it would be fair

withabix

munchpot wrote: »

I don't think it is having it both ways. If I pay by debit card on Tuesday lunchtime, when I check my account the next day the money has been taken. Therefore they should operate the same way and refund in the same period of time in which they debit.

If they did I wouldn't be asking the question as it would be fair

But they DO usually refund you in the same period. When you buy something on a card, the shop lets you take it home before they get the money.

The payment has to go through the banking system - that's what takes the time.

You may see the refund quicker if you happen to use the same bank as the shop AND the card processor is also part of the same bank (eg Barclays Merchant Services etc).

molerat

CG19a wrote: »

I know with my experience of Tesco vat receipts, paying by card affects how much vat you paid. (at least it did about 5 years ago when I worked on customer services)

Example
£120 paid by cash - £20 vat paid. (£100 going to Tesco)

£120 paid by card (2.5% card processing fee off) = £117 paid , so vat on this would be £19.50 with £97.50 going to Tesco.

This may have changed, but this was also one of the reasons at the time why we generally always paid back onto a card.

The "payment processing fee" was a VAT fiddle by retailers in that they did not pay the VAT on that amount only paying on 97.5% of sales, fractions of pennies per pound but huge amounts in the bigger picture, and was closed by HMRC / EU court in 2010 / 11.

Fosterdog

munchpot wrote: »

I don't think it is having it both ways. If I pay by debit card on Tuesday lunchtime, when I check my account the next day the money has been taken. Therefore they should operate the same way and refund in the same period of time in which they debit.

If they did I wouldn't be asking the question as it would be fair

The problem with this is that it's not actually the retailer that's holding the money for that time it's the bank/s. It's the bank you should be annoyed at if anything.

Going with your example, you pay for something Tuesday lunchtime and the payment shows as being taken. The shop's bank will show as funds pending so they don't actually get the money on the Tuesday lunchtime, it's in the banking system for anything from 1-5 days before the money is in the shops bank account.
You go in a week later and have a refund and the same as it did for you the money leaves the shop's bank account almost immediately but stays in the banking system for 1-5 days until it clears in your account.

arcon5

munchpot wrote: »

I don't think it is having it both ways. If I pay by debit card on Tuesday lunchtime, when I check my account the next day the money has been taken. Therefore they should operate the same way and refund in the same period of time in which they debit.

If they did I wouldn't be asking the question as it would be fair

If you get a refund in a shop though, they DO refund you straight away.

You take the goods with you, they take your card, issue a refund and a receipt. When happens between this time and it hitting your account is outside of their control.