Credit Card Cash Trick!

chattychappy

Almost certainly such a transaction would conflict with the merchant agreement that the uncle has.

In theory it could trigger HMRC (income unaccounted for), VAT, or ML concerns but unlikely on this scale and all could be answered by suitable documentation.

So main concerns are: risk to uncle of breaking merchant agreement and getting caught and cost to uncle.

Better for uncle to lend nephew a few quid out of his pocket, for a 1% fee!

James129

Can't he just create account on netteller or moneybookers and then add funds by cc. They charge 1.5 to 1.9% fees respectively. And then withdraw funds to bank account.

Gromitt

I know Neteller charge 1.75% deposit fee plus a 7.5E withdrawal fee.

Not really the interest free period the OP is looking for.

hermante

James129 wrote: »

Can't he just create account on netteller or moneybookers and then add funds by cc. They charge 1.5 to 1.9% fees respectively. And then withdraw funds to bank account.

Those transactions are treated as cash advances so you would pay interest from the day you made them. I suppose if your uncle owned an oyster top-up shop and you wanted £10, you could top up an oyster card and get it refunded at a tube station.. but larger amounts will take a few days and be sent by cheque.

lisyloo

There's nothing dodgy or illegal about it

Do you have link e.g. an example merchant contract.
I've heard it's in breach of the merchant agreement between the merchant and mastercard/Visa.

Can you prove the statement above, with say a link or an extract from a contract?

zagfles

lisyloo wrote: »

Do you have link e.g. an example merchant contract.
I've heard it's in breach of the merchant agreement between the merchant and mastercard/Visa.

Can you prove the statement above, with say a link or an extract from a contract?

You want me to prove a negative?:rotfl:I don't think there's a law against people painting their toenails green on a full moon but I can't prove it!

But the fact is there are retailers who will give cashback on cards, both credit and debit. They're not going to risk breaking the law or getting their card facilities withdrawn for something which provides them very little benefit.

There could be merchants who do have agreements not to give cashback for whatever reason, eg increased risk of fraud, but it doesn't seem to apply across the board. There might also be limits, again I'm not sure.

Perhaps you could search for proof if you're that interested.

lisyloo

You want me to prove a negative?

I don't think it's that crazy an idea, if it's explicitly excluded.
If should be totally clear what merchants can do under the agreement.

The law about VAT and mney laundering is pretty clear, otherwise criminals would work round the loopholes (people with access to muh more resources than jsut us).

But the fact is there are retailers who will give cashback on cards, both credit and debit.

I've only heard of one which is Wilkinsons that do credit cards.
Are there others? or are they the only one.

Perhaps you could search for proof if you're that interested.

Unfortunately when you look up "cashback" and credit cards you get the other kind i.e. the reward kind and not the cash kind.

I jsut wondered if you had access to the information as you seeemed to be stating authoritatively that it's not illegal without anything to back that up.
All the information I've seen on here before, it's generally agreed that it's not part of the merchant's agreement.
Whether the uncles wants to go ahead is up to him, but if it was a genuine "loophole" then I'm sure Martin would be recommending it or advertising it in his weekly emails.
It's clearly up to the individuals concerned but I think there are some doubts being raised on this.

Gromitt

It may be that Wilkinson think of it like so:

They have a low percentage due to the amount of sales they have.
It's good customer service.
It offsets the cost to transport, insure and deposit the cash they would otherwise have to bank (may work out as 1% or so)

ScottHeron

Gromitt wrote: »

It may be that Wilkinson think of it like so:

They have a low percentage due to the amount of sales they have.
It's good customer service.
It offsets the cost to transport, insure and deposit the cash they would otherwise have to bank (may work out as 1% or so)

Now THATS what you call clever thinking!

Totally agree with you mate!

chattychappy

lisyloo wrote: »

The law about VAT ... is pretty clear,

There are no issues here. There is no taxable supply for VAT purposes. The cash going out together with a matching credit card receipt (ie same amount from CC company) should demonstrate the nature of the transaction in the unlikely event it got queried.

lisyloo wrote: »

The law about .. money laundering is pretty clear,

Ha ha ha, I can assure you it isn't! But people really need to define their terms. Clearly we are NOT talking about drug money, terrorist finance, proceeds of crime etc. Ie there is no actual money laundering.

So the only issue is whether it could look that way to a MLRO (money laundering reporting officer), or someone else with reporting responsibilities. Well.. even assuming the uncle is running some kind of venture with enhanced responsibilities, (eg a bureau de change) then he won't be under any obligation because he "knows his customer". Perhaps his accountant might be suspicious - but unlikely if it is properly documented, particularly given the one-off and rather small amount. Finally what about the CC companies? Well, they will just see it as a purchase (from both the CC holder side and the merchant side). Not much suspicion there.