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Cashback where it started
pqrdef
Posts: 4,552 Forumite
in Credit cards
Went to pay a bill by credit card, and there's now a 1.5% charge.
So the CC company gives me cashback, and passes the cost on to the merchant, who passes the cost straight on to me, so I pay for my own cashback.
What's the point? The interchange fees are supposed to be paid by the merchant. It's the price the merchant pays for being able to offer a credit facility to customers. It gets sales that wouldn't otherwise be made, and it gets payments from people who otherwise might be unable to pay.
If the card companies aren't going to insist that merchants don't pass on fees, the whole system will fall into disrepute.
So the CC company gives me cashback, and passes the cost on to the merchant, who passes the cost straight on to me, so I pay for my own cashback.
What's the point? The interchange fees are supposed to be paid by the merchant. It's the price the merchant pays for being able to offer a credit facility to customers. It gets sales that wouldn't otherwise be made, and it gets payments from people who otherwise might be unable to pay.
If the card companies aren't going to insist that merchants don't pass on fees, the whole system will fall into disrepute.
"It will take, five, 10, 15 years to get back to where we need to be. But it's no longer the individual banks that are in the wrong, it's the banking industry as a whole." - Steven Cooper, head of personal and business banking at Barclays, talking to Martin Lewis
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Went to pay a bill by credit card, and there's now a 1.5% charge.
So the CC company gives me cashback, and passes the cost on to the merchant, who passes the cost straight on to me, so I pay for my own cashback.
What's the point? The interchange fees are supposed to be paid by the merchant. It's the price the merchant pays for being able to offer a credit facility to customers. It gets sales that wouldn't otherwise be made, and it gets payments from people who otherwise might be unable to pay.
If the card companies aren't going to insist that merchants don't pass on fees, the whole system will fall into disrepute.
merchants don't pay for credit cards... they charge their customers
either directly like in your example or indirectly where everyone else pays for you0 -
Some bills do charge 1.5% its annoying isn't it when you have a cashback card.
In those instances I use my debit card. But know that I can get the 1% on almost all other spending.0 -
I guess the company issuing the bill would argue that you are pushing up the amount of other people's bills because I assume they are charged more for a CC transaction than for a DD payment.0
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Or the card pays for itself in reduced selling and collection costs.merchants don't pay for credit cards... they charge their customers
either directly like in your example or indirectly where everyone else pays for you
Customer acquisition costs money. Taking credit cards gets more customers.
And they wouldn't dare slap a charge on for payment by cash or cheque, but what does it cost to process those compared to an online payment, and who pays that?"It will take, five, 10, 15 years to get back to where we need to be. But it's no longer the individual banks that are in the wrong, it's the banking industry as a whole." - Steven Cooper, head of personal and business banking at Barclays, talking to Martin Lewis0 -
Customer acquisition costs money. Taking credit cards gets more customers.
It's not as simple as that though. In some sectors, it will make no difference - eg utilities.
And some companies will compete on price firstly and then price up the individual service elements (such as taking a card) separately, Whereas other brands will bundle the costs together, so everyone pays enough to cover the costs.
If paying for using credit cards is that important to the customer, then businesses will need to change. But I'm guessing that it's only an annoyance to most people, given the number of companies that still charge separately.0 -
There are many companies e.g. utilities, that give a discount for Direct debit, so whilst there is no explicit charging for cash/cheque it is certainly more expensive to pay that way for some items.And they wouldn't dare slap a charge on for payment by cash or cheque
In the example of utilities, customers who pay by cash cheque pay that by losing out of discounts that direct/debit customers pay.but what does it cost to process those compared to an online payment, and who pays that?
The only difference is that the lack of a discount is more palatable to many than an explicit charge, but at the end of the day it's the same thing - you end up paying more.
Personally I use my noggin to decide how to pay, so where there is a discount for Direct Debit I pay that way, where there is a charge for CC e.g. holidays I pay by debit card.
I don't think there is any point moaning about the fact that the world isn't to my liking.
Retailers are entitled to chose what methods they want to use just as we are free which comapnies to use and which methods of payment.
If you use your noggin you'll come out ahead e.g. get cashback and discounts and secion 75 protection.0 -
What's the point?
The point for whom? Retailers or Credit card companies?
For credit card companies the point is making money.
Not everyone is savvy and uses cashback. Most people aren't and pay interest and fees.
For retailers they have to balance ease of handling e.g. lots of cash is a problem, attracting customers and keeping costs down.
In many cases they'd lose business if they didn't accept credit cards.
Handling case and getting securicor vans in is expensive.
So retailers have to weigh all that up.0 -
It'll make a difference when I get on the comparison sites and switch. It'll save me money. I wasn't going to bother because I quite liked my current supplier, but now I don't. And it'll cost them more to get me back than it would have cost them to keep me. Who pays that?Deleted_User wrote: »It's not as simple as that though. In some sectors, it will make no difference - eg utilities.
This kind of strict apportionment of costs is always nonsense. What saves everybody money is spreading the fixed costs across a bigger customer base."It will take, five, 10, 15 years to get back to where we need to be. But it's no longer the individual banks that are in the wrong, it's the banking industry as a whole." - Steven Cooper, head of personal and business banking at Barclays, talking to Martin Lewis0 -
It'll make a difference when I get on the comparison sites and switch. It'll save me money. I wasn't going to bother because I quite liked my current supplier, but now I don't. And it'll cost them more to get me back than it would have cost them to keep me. Who pays that?
This kind of strict apportionment of costs is always nonsense. What saves everybody money is spreading the fixed costs across a bigger customer base.
one of the wonders of a reasonable free market is that you can take your business elsewhere and retailers can model their business as they wish.0 -
Went to pay a bill by credit card, and there's now a 1.5% charge.
So the CC company gives me cashback, and passes the cost on to the merchant, who passes the cost straight on to me, so I pay for my own cashback.
Er no.
Your credit card company does not pass your cashback cost onto the retailer....
Visa/mastercard set the charges to the retailer.
If your card provider decides to give you cashback. Then they are doing it not recouping this from anyone else.Never ASSUME anything its makes a>>> A55 of U & ME <<<0
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