If I make a CC payment of 1p who gets the 1p?

iAMaLONDONER

I once went to a supermarket and used a gift card which payed all the balance but 1p. As I had only a £20 note in cash I decided to pay by CC to avoid receiving £4.99 of coins.

Out of curiosity I know CC companies charge merchants a % of the transaction ,but in this case of a 1p payment who would get the 1p-the merchant or the CC company (Capital One in this case)?

LittleAoife

iAMaLONDONER wrote: »

I once went to a supermarket and used a gift card which payed all the balance but 1p. As I had only a £20 note in cash I decided to pay by CC to avoid receiving £4.99 of coins.

Out of curiosity I know CC companies charge merchants a % of the transaction ,but in this case of a 1p payment who would get the 1p-the merchant or the CC company (Capital One in this case)?

Surely you would have received £19.99 back if £20 note.

Gromitt

I don't know for sure, but I wouldn't imagine it worked like that.

I'd guess that they simply process all payments into a 'pot'. The merchant gets paid once a month from this 'pot', excluding their commission of perhaps 2.5%.

So if you processed 1000 individual 1p transactions and paid 2.5% per transaction, I'd guess that the merchant gets paid £9.75 minus subscription fees.

LittleAoife wrote: »

Surely you would have received £19.99 back if £20 note.

Which would be £15 in notes and £4.99 in change. Its the change the OP didn't want, not the notes.

TurnUpForTheBooks_2

That sounds like a question that Michael O'Leary of Ryanair could answer exactly based on experience of some of his crazy 1p fares of a few years ago, but I am sure he would instead protest that he wouldn't even confess the truth of that one to his priest ! :rotfl:

Oh I see Gromitt has spoiled the fun by coming up with the common sense answer for a volume of business

molerat

That is the reason why the "big boy" supermarkets will happily accept a CC payment for any value as they will only pay a fixed % of the total spend whereas the little corner shop imposes a min £5 - 10 spend as they have to pay a fixed fee per transaction + a % of the spend.

iAMaLONDONER

molerat wrote: »

That is the reason why the "big boy" supermarkets will happily accept a CC payment for any value as they will only pay a fixed % of the total spend whereas the little corner shop imposes a min £5 - 10 spend as they have to pay a fixed fee per transaction + a % of the spend.

Oh I see- the Newsagent charges a fixed 60p for card usage- only wanted to top £1.40 to use the bus! So I ended topping a £5 at the tube machine!

It's unfair that big businesses are institutionally favoured over small retailers

eskbanker

iAMaLONDONER wrote: »

It's unfair that big businesses are institutionally favoured over small retailers

Well that's one way of looking at it but of course the large supermarkets would rightly point out that they're putting far more business to the card companies and therefore understandably expect to secure preferential pricing from them (and all their other suppliers)! Do you have an ideological objection to free market capitalism?

iAMaLONDONER

eskbanker wrote: »

Well that's one way of looking at it but of course the large supermarkets would rightly point out that they're putting far more business to the card companies and therefore understandably expect to secure preferential pricing from them (and all their other suppliers)! Do you have an ideological objection to free market capitalism?

I don't have a problem with truly 'free-market capitalism' after all isn't the fact that 6 or so businesses have a stranglehold on the grocery market undermining the free market?!

I think the best thing is small business and small government ( in a sentence)

Maestro.

iAMaLONDONER wrote: »

I don't have a problem with truly 'free-market capitalism' after all isn't the fact that 6 or so businesses have a stranglehold on the grocery market undermining the free market?!

I think the best thing is small business and small government ( in a sentence)

Erm, the free market is exactly what caused the situation you described above. The "free market" part also means "free to manipulate the market", and is how monopolies and duopolies form so easily under capitalism. It's also why when a Tesco Extra moves into a village you find half the local independents start going out of business. That is entirely how "free market" works, the market with the most money behind it has the buying power to essentially strangle its competition.

If in fact big businesses were regulated so they couldn't become enormous in size, and were, for instance, banned from small towns and villages, then we'd see a lot more of the "free market" you're actually talking about. Interestingly I heard on the radio today that labour (I think?) were talking about how they'd like to limit how big a bank can grow. That's the kind of thinking you don't tend to hear from politicians and when you do it's usually lies.

Scarpacci

Maestro. wrote: »

Erm, the free market is exactly what caused the situation you described above. The "free market" part also means "free to manipulate the market", and is how monopolies and duopolies form so easily under capitalism. It's also why when a Tesco Extra moves into a village you find half the local independents start going out of business. That is entirely how "free market" works, the market with the most money behind it has the buying power to essentially strangle its competition.

If in fact big businesses were regulated so they couldn't become enormous in size, and were, for instance, banned from small towns and villages, then we'd see a lot more of the "free market" you're actually talking about. Interestingly I heard on the radio today that labour (I think?) were talking about how they'd like to limit how big a bank can grow. That's the kind of thinking you don't tend to hear from politicians and when you do it's usually lies.

Free for whom? There's nothing free about being told you can not have a supermarket in this town, you must use independent butchers, bakers and candle stick makers whether you like it or not. If a Tesco Extra moves into a village, it will only survive if the people of the village choose to shop there.

Rightly, we tend to prioritise freedom of choice for the consumer. We might not be building moats around small businesses to protect them, but they and the supermarkets are free to compete with each other. If a small village can't support a supermarket + independent, it's unlikely to be a bastion of free enterprise. One butcher who competes with nobody else and a baker who competes with nobody else have little incentive to be reasonably priced. At least with a supermarket there's some national competition on pricing.

The supermarket sector is very competitive in and of itself. You only have to read of the woes of Tesco, ASDA, Morrisons and, to a lesser extent, Sainsbury's at the hands of Waitrose, M&S, Lidl and Aldi to see that. The people have essentially spoken when it comes to supermarkets or independent stores. Whatever the people claim about preferring them, they wouldn't be disappearing if people used them. Many towns and cities can and do support supermarkets and independents. I can't ultimately see anything wrong with independents disappearing in places where people choose to switch completely to supermarkets.

molerat

I do have some sympathy with the little man though. I used to work for a large chain specialist retailer and we often had the lads from the local indy coming in for a chat and look around. I always remember one day when they told us that we were selling an item at £1K, 20% less than they were paying for it. Admittedly our company paid for all the warranty rather than using the manufacturer but that was one heck of a difference in price and there was no way they could compete.