Vodafone Direct Debit No Charge

NFH

jimltfc wrote: »

I have just been on Vodafone's Terms and conditions and on number 8 it states this £3.53 charge. Will that affect what Trading Standards will say??

No, terms and conditions cannot override any legislation.

simax

NFH wrote: »

So they are all in breach then.

I'm pretty sure they are not. They wouldn't all flout it.

Are you sure that legislature covers non-DD fees? Not just card handling fees, which are different?

NFH

simax wrote: »

I'm pretty sure they are not. They wouldn't all flout it.

Are you sure that legislature covers non-DD fees? Not just card handling fees, which are different?

Absolutely sure. You can read BIS's guidance. Just because other networks are flouting the law, it doesn't mean they're not all in breach. It's a disgrace.

Buzby

However, it is up to the consumer to pursue the vendor (and take them to court for non repayment).

They made sure there would not be a quick-fix, as this still gives a defence of the 'consumer agreed to it' for historical billing issues.

NFH

Buzby wrote: »

They made sure there would not be a quick-fix, as this still gives a defence of the 'consumer agreed to it' for historical billing issues.

That can apply only to contracts started before 6th April 2013.

gjchester

NFH wrote: »

Therefore Vodafone can charge you only what it costs them to process the payment. Clearly £3.53 is a lot more than what it costs them to receive payment by bank transfer for example. Maybe Vodafone hasn't updated its systems yet, although this is surprising as it has been several months since the new legislation came into force.

I thought it wasn't that simple. You cannot charge a differential (so say £5 for a credit card, £2 a debit card or £1 cash) for goods but you CAN charge as admin Fee as long as it's consistent across all payment mechanisms. So you could charge £3.53 for billing to all forms of payment and offer a discount of £3.53 for DD users.

If you charge a differential it can be an average of all costs, so lets say if cost 5% for a Amex, 3% for a Credit card and 1% for a debit card then you COULD charge the average of 3% across the board rather than trying to adjust it according to what you use, and yes if the majority of customers are using a debit card with lower costs then yes the shop takes more.

However like so many laws it needs to be tested in court before it's clear what it means.

NFH

gjchester wrote: »

I thought it wasn't that simple. You cannot charge a differential (so say £5 for a credit card, £2 a debit card or £1 cash) for goods but you CAN charge as admin Fee as long as it's consistent across all payment mechanisms. So you could charge £3.53 for billing to all forms of payment and offer a discount of £3.53 for DD users.

If you charge a differential it can be an average of all costs, so lets say if cost 5% for a Amex, 3% for a Credit card and 1% for a debit card then you COULD charge the average of 3% across the board rather than trying to adjust it according to what you use, and yes if the majority of customers are using a debit card with lower costs then yes the shop takes more.

No, that's not how it works. See BIS's guidance where this is all explained in detail.

Any price differential based on the method of payment (whether it works as a surcharge or as a discount) must reflect the costs or savings incurred. A business cannot average across multiple payment methods, but it can average across multiple payments by the same payment method.

gjchester

NFH wrote: »

No, that's not how it works. See BIS's guidance where this is all explained in detail.

Any price differential based on the method of payment (whether it works as a surcharge or as a discount) must reflect the costs or savings incurred. A business cannot average across multiple payment methods, but it can average across multiple payments by the same payment method.

Sorry which bit were you referring to?

BIS's guidelines on P13 clearly state a discount for a direct debit is acceptable, and also state that a retailer may aggregate a fee across other similar means.

Any supplier will say (correctly in most cases) the costs of DD are lower so the saving is passed on, and could aggregate all payment by cards together.

It's not practical (as referred to in the BIS guidelines) to have different %ages to charge (even if they are the exact %ages) depending on the type or card used, and hard to compare across retailers who have different banking arrangements in place. Obviously a small business would be charged more per transaction than Tesco.

However in this case all means other than DD incur the fee and so the regulations do not apply (top of Bis's document on P12).

NFH

Oh dear. You haven't read it properly.

gjchester wrote: »

BIS's guidelines on P13 clearly state a discount for a direct debit is acceptable, and also state that a retailer may aggregate a fee across other similar means.

No, it does not state this. It says "Discounts from the headline price for the use of a particular means of payment (for example for payment by direct debit) are common in certain sectors (for example in the energy sector) and generally popular with traders and consumers. They are generally efficient and the Government has no wish to discourage discounts of this nature. Traders generate cost savings by collecting regular payments by direct debit and the Government believes it is legitimate. If the discount offered for a particular means of payment reflects the cost savings for the trader, and the additional amounts payable by consumers using other means of payment reflect the additional cost borne by the trader for the use of these other means, this would not be in breach of the Regulations or Article 19".

It is also clear that a business may aggregate/average across similar means, but not across different means. For example, it would be reasonable to aggregate/average across Visa, MasterCard and American Express, but not to do so across American Express and received bank transfers for example.

gjchester wrote: »

Any supplier will say (correctly in most cases) the costs of DD are lower so the saving is passed on, and could aggregate all payment by cards together.

How is the cost of direct debit any lower than receiving a bank transfer? As stated on page 12, a business cannot take into account general administrative overheads.

gjchester wrote: »

However in this case all means other than DD incur the fee and so the regulations do not apply (top of Bis's document on P12).

As is clear from the guidelines, if the fee is dependent on payment method (and is not across the board for all payment methods), then the regulations do apply.