2.5%

bris

Do you think Master card are free? They charge merchants a fee for their service, this fee is passed on to you, how difficult is that to understand.

Lemonsqueezer78

Mastercard don't charge the merchant anything. The merchants' bank charge them, and the bank pay a network interchange fee to MC. But in any case its unlikely the merchant are paying anywhere near 2.5%. However the company in question will justify the mark-up as covering the administrative costs of taking credit card payments... the cost of processing them, handling disputes and so on. Unfortunately there is not much you can do.

lisyloo

GDJTAM wrote: »

not sure why certain forum members can't answer a question civilly without been obnoxious about it!

I only asked why...that's how we learn!

Not sure if that was aimed at me, but I gave 4 reasons.

chattychappy

Heng_Leng wrote: »

They do actually have to justify their credit card charges as they aren't allow to do more than cover their costs. Therefore, your statement about making a profit is wrong.

I read that statement differently. I read it as: nothing wrong with businesses making a profit - therefore why shouldn't CCs charge such a fee to merchants for acceptance when potentially the cardholder gains so many benefits? In the case of merchants, nothing with them making a profit, so why shouldn't they pass on the costs of handling CCs, rather than take the hit themselves?

Ie the merchants aren't particularly looking to make a profit out of the charge itself.

gt94sss2

In the past, some merchants were looking to make a profit out of the credit card charges they made consumers pay. The legislation above was designed to outlaw this.

Mastercard and Visa are not allowed to charge more than 0.3% in charges to financial institutions but the charge a merchant may charge will include banking/other fees on top of this that banks charge merchants.

System

chattychappy wrote: »

I read that statement differently. I read it as: nothing wrong with businesses making a profit - therefore why shouldn't CCs charge such a fee to merchants for acceptance when potentially the cardholder gains so many benefits? In the case of merchants, nothing with them making a profit, so why shouldn't they pass on the costs of handling CCs, rather than take the hit themselves?

Ie the merchants aren't particularly looking to make a profit out of the charge itself.

True but if they are accepting debit cards at no charge, then they would need to be charged 2.5% for taking credit cards as the admin and systems are identical.

jamesperrett

Don't forget that, if you have a cashback credit card, the cashback will come from that charge.

chattychappy

Heng_Leng wrote: »

True but if they are accepting debit cards at no charge, then they would need to be charged 2.5% for taking credit cards as the admin and systems are identical.

It might be that they choose to absorb more costs with debit cards in order to avoid people asking to pay by cash or cheque. Another issue is "allocating" fixed costs - eg monthly fees, machine rental etc.

phillw

Heng_Leng wrote: »

True but if they are accepting debit cards at no charge, then they would need to be charged 2.5% for taking credit cards as the admin and systems are identical.

Card readers look the same, but processing changes further down the line. Even HMRC charges you extra to pay your tax bill by credit card.

The money will go towards things like paying for fraudulent transactions.