extra charge for paying with credit card

butch_dingle_2

Interestingly I was recently paying for a holiday, on which the internet site was going to charge me 2% or something like that (worked out about 30 quid or so)....I had recently paid for some flights using my company visa charge card (citibank), and it hadnt charged a surcharge.

So I put my co card details in, and voila, I saved the 30 quid

Of course I paid my charge card back right away....

rifalda

student100 wrote: »

The reason for charges is that retailers pay credit card processing fees as a percentage of the total bill (varies depending on the company, but something like 1-3% is probably likely) whereas debit card processing is charged at a flat rate (20-60p or that rough ballpark).

So if you spend £200 then by credit card it might cost them £4 to process versus 40p for debit card.

Due to the "low frills" policy of places like Ikea, and the fact that their average spend per shop is quite high, they've introduced charges for credit cards but not debit cards.

In other places like supermarkets, the average spend probably varies considerably. If you only spend £20 in one go then there's probably no difference in cost to Tesco between processing credit and debit card payments. Spend say £10 and the credit card is actually the cheaper option. So supermarkets haven't thought it worthwhile to put fees in place for credit cards.


Ultimately it's up to the consumer to factor in the card fees when deciding where to shop and how to pay. If you're buying £500 of furniture in Ikea then the interest free period and 1% cashback on a credit card will easily outweigh the 75p card fee. For an Easyjet flight perhaps paying by debit card will be most effective.


It's also worth remembering that taking cash payment has a cost involved (someone to count it, risk of theft, Securicor collections etc), so cash payers probably cost shops just as much as those paying by card. And antiquated payment methods like cheques are so expensive to process that even places like Sainsburys are phasing them out now.

Thank you all for your interesting answers.

I understand the mechanics but still I'm surprised to hear that people find these charges to the consumer as "fair". I think the banks, the credit card companies and the merchant are doing business with us buying their goods, so if there is a cost for it, this cost should be considered into the total operation costs, other wise it sounds to me like a double charge.

Unfortunatelly there is only one IKEA, I can't change the supplier can I?. Merchants are selling goods because we are willing to pay with credit cards, so better to look after the client needs also, not only the business big profits.
After all, the society is going to be plastic in the future and cash will be something to remember by.