Credit Card Charges

Beach_Baby

Why does my travel agent charge me a little over 2% to pay for my holiday when the percentage the banks charge them is considerably lower?:(

Voyager2002

Because they can.

DomRavioli

Beach_Baby wrote: »

Why does my travel agent charge me a little over 2% to pay for my holiday when the percentage the banks charge them is considerably lower?:(

Because a CC charge doesn't only cover the merchant fee (which is what I'm guessing you're talking about). It covers any extra paperwork, and the risks associated with credit card purchases for sellers (section 75 usually). Its like a mini insurance policy bundled in with any associated administration, and the merchant fee.

Plus again, they can charge what they like. There isn't a fee for cash.

stephb34

I thought the travel agents have to pay the card provider more than 2% in fees but only ask for 2. You have other ways of paying that are free so you have a choice.

Moto2

stephb34 wrote: »

I thought the travel agents have to pay the card provider more than 2% in fees but only ask for 2. You have other ways of paying that are free so you have a choice.

The interchange fee is 0.3% (it used to be 0.8%)

http://www.telegraph.co.uk/personal-banking/credit-cards/eu-ban-on-creditcard-fees-backfires--youll-still-pay25pc-to-spen/

shaun_from_Africa

DomRavioli wrote: »

Because a CC charge doesn't only cover the merchant fee (which is what I'm guessing you're talking about).It covers any extra paperwork, and the risks associated with credit card purchases for sellers (section 75 usually). Its like a mini insurance policy bundled in with any associated administration, and the merchant fee.

Plus again, they can charge what they like. There isn't a fee for cash.

No they can't.
When accepting payment by credit cards, the retailer is legally only allowed to charge an amount that directly covers the extra costs incurred by them in accepting that payment.
They are not allowed to make a profit from the fees nor can they may a charge to cover any risks such as S75 protection. (Apart from the fact that S75 risk is born by the credit card issuer and not the retailer).

savvy392

I totally agree with Shaun.

The Consumer Rights Regulations that came into force on April 6th 2013 state in Para. 4. (Excessive charges prohibited) the following;

" A trader must not charge consumers in respect of the use of a given means of payment, fees that exceed the cost borne by the trader for the use of that means."

UK Government guidance published in 2015 confirms that "...the cost...." Is the external cost to the trader and should not include any internal costs even if the trader employs persons to solely deal with credit card transactions.

The Merchant Service Charge (MSC) is the only cost the trader should be able to add to a credit card transaction. As far as I understand, this is made up of two costs, the so called "interchange fee" charged by the likes of Visa and MasterCard plus the fee the trader pays his bank for handling credit charge transactions on his behalf.

I have recently been charged 2.6% by a holiday company for payment of an upcoming holiday in advance. I intend to challenge this charge (and a similar charge on a payment to the same company a year ago). However there does not seem to be a way of discovering what the holiday company is charged in terms of MSC.

My conclusion is that a law exists to protect the consumer but because the law does not place the onus on the trader to be transparent in terms of MSC, traders are able to charge pretty well what they like.
The courts are open to the consumer as a source of redress. But very few cases have been brought to court since 2013. Hardly suprising when MSC's remain so opaque!

SailorGeoff

Interesting, I have just used a 0%on purchase credit card to pay the large element of a car purchase. The retailer hit me with a 2.75% fee for the balance over £2000. The cost of borrowing was greater than 2.75% so I am still ahead, but you get the feeling they are making on the personal decision to buy using a credit card. How do you get a retailer to be transparent?!

meer53

SailorGeoff wrote: »

Interesting, I have just used a 0%on purchase credit card to pay the large element of a car purchase. The retailer hit me with a 2.75% fee for the balance over £2000. The cost of borrowing was greater than 2.75% so I am still ahead, but you get the feeling they are making on the personal decision to buy using a credit card. How do you get a retailer to be transparent?!

They are being transparent, they tell you the charge before you buy. Your choice the use a credit card, not theirs.

martindow

meer53 wrote: »

They are being transparent, they tell you the charge before you buy. Your choice the use a credit card, not theirs.

True but they need to comply with the regulations mentioned by savvy. It is difficult though as they can argue that their charge is not just the percentage fee charged by the card provider.

Established companies with a reasonable turnover are likely to be paying far less than 2% but they are not going to tell you the exact figure.

1trainer1

it is part fee they pay and part profit, I used to work for a company years ago who used to charge 2% cc fee and they used to factor in the cost of people paying with Debit card as they still get charged with any card payment but debit card is a lot less.