MSE News: Big brands fail to stop charging credit card fees after ban

rtho782

From the legislation:

"commercial card’ means any card-based payment instrument issued to undertakings or public sector entities or self-employed natural persons which is limited in use for business expenses where the payments made with such cards are charged directly to the account of the undertaking or public sector entity or self-employed natural person;

This means that if a company allows employees to make personal purchases on a business card, which may be reclaimed from salary or repaid in say, 30 days, then no card processing fees should ever be charged to them.

As this is a matter of company policy and unknowable by the retailer, they either do not charge business cardholders either, or risk breaking the law.

Roger1

Austrian Airlines sent me an e-mail this week promoting a possibly reasonable fare of £95 from London to Vienna return. Hovering over the t+c, I see that if paying by credit card, I would be charged an 'optional' :rotfl: payment fee of £4.50.

On that fare, the fee would be 4.7%. I didn't bother to go any further.

eddddy

unforeseen wrote: »

Have a lot of experience coding large websites then?

They may have had months to do it but until the new website becomes live then you do not know whether it will work. What works in a test environment doesn't always work in live

Hmmm.... large ecommerce sites that are unable to easily and reliably adjust their pricing (with months of notice). Really?

They must really struggle with new discount codes, sales, promotions etc.

Ecommerce is a very dynamic and competitive industry. A company with an ecommerce platform that is that inflexible/unreliable has very big problems.

It's much more likely that somebody failed to notice the change in the law.

TheBanker

rtho782 wrote: »

From the legislation:

"commercial card’ means any card-based payment instrument issued to undertakings or public sector entities or self-employed natural persons which is limited in use for business expenses where the payments made with such cards are charged directly to the account of the undertaking or public sector entity or self-employed natural person;

This means that if a company allows employees to make personal purchases on a business card, which may be reclaimed from salary or repaid in say, 30 days, then no card processing fees should ever be charged to them.

I don't think it does mean that. I have a company credit card, and there is a mechanism for the company re-claiming costs from my salary. It's only supposed to be used to correct an error e.g. wrong card was used (I did once use the company card to pay for petrol by mistake as it looks similar to my main personal card).

But the key thing is, the payments are "charged directly to the account of the undertaking". The "undertaking" then passes that charge on to the individual but I don't think that affects the ability of the retailer to charge a fee for this type of card.

Nick_C

I may be wrong but I thought commercial cards (small business or corporate use) are meant to be issued solely for business use. Isn't personal use a contravention of the agreement with the issuer?

TheBanker

Nick_C wrote: »

I may be wrong but I thought commercial cards (small business or corporate use) are meant to be issued solely for business use. Isn't personal use a contravention of the agreement with the issuer?

In my case the card issuer and employer are one and the same. The terms of use (between me and my employer) do not permit personal spending, but acknowledge that under limited circumstances (e.g. an error like I made, or if I'm staying away and choose a more expensive meal than is permitted) it can occur and therefore they have a mechanism for repayment.

It always used to amuse me that:
HR policy said we had to use a certain supplier to book travel
Said supplier charged a 2.5% fee for using a credit card
HR policy also said that where possible staff should pay for travel using a company credit card.

HR also regularly said we should cut travel costs - should see a 2.5% reduction now :rotfl:

tastyhog

unforeseen wrote: »

Have a lot of experience coding large websites then?

They may have had months to do it but until the new website becomes live then you do not know whether it will work. What works in a test environment doesn't always work in live

i'd be extremely concerned if a large commerce site needs to do any form of coding to change things like payment settings, postage settings, updating prices for products etc etc rather than just logging in to a back-end admin panel and ticking a few boxes

we aren't living in the damned 1990's

rtho782

TheBanker wrote: »

I don't think it does mean that. I have a company credit card, and there is a mechanism for the company re-claiming costs from my salary. It's only supposed to be used to correct an error e.g. wrong card was used (I did once use the company card to pay for petrol by mistake as it looks similar to my main personal card).

But the key thing is, the payments are "charged directly to the account of the undertaking". The "undertaking" then passes that charge on to the individual but I don't think that affects the ability of the retailer to charge a fee for this type of card.

So, that's your companies policy. My (hypothetical) small company allows it's employees to make personal purchases on their company credit cards, and we then reclaim from payroll. It seems a stupid decision for us to make as it's loads of work, but it's our stupid decision to make.

The card is then not "Limited in use for business expenses" as per the letter of the legislation and therefore does not meet the definition of a commercial card, and as such it is illegal to charge processing fees.

As long as one company with such a policy exists, or the possibility of one exists, it is not possible to safely charge fees just because the card says "business" on it.

Statue is interpreted as written, you can't go "I don't think that is what is intended", it is what is written that matters in court.

Some card issuers might forbid personal use on their business cards, but is it possible to say that all of them, worldwide, do? As long as any business card issuer worldwide allows it, it is a risk to charge fees.

For example, do those challenger banks (e.g. Starling) that offer business accounts explicitly forbid what I am suggesting?

miller

Is there something in the PAN of the credit card that identifies it as business or personal?

Presumably this information would need to be submitted first for the website to identify the type of card and then any fee(s) to be displayed before processing the payment itself (e.g. I decide not to proceed using a business card, because £x fee has been added/shown)?

On a similar note, can the type of current account be identified from the sort code and account number?

eskbanker

rtho782 wrote: »

So, that's your companies policy. My (hypothetical) small company allows it's employees to make personal purchases on their company credit cards, and we then reclaim from payroll. It seems a stupid decision for us to make as it's loads of work, but it's our stupid decision to make.

The card is then not "Limited in use for business expenses" as per the letter of the legislation and therefore does not meet the definition of a commercial card, and as such it is illegal to charge processing fees.

Surely any such personal expense that's paid for with a business card is a business expense, in that the business initially pays the bill, is financially and legally liable for the credit arrangement and any associated debt, and puts the transaction through its books in some form or another, even though it isn't the beneficiary of the purchase (which could be another definition of 'business expense')?

Even though in your scenario there is subsequently a recharge to the employee, it still seems legitimate to me to categorise it initially as a business expense, even if it effectively then becomes a personal one once the employee has repaid the employer.

Or to put it another way, in the phrase "limited in use for business expenses where the payments made with such cards are charged directly to the account of the undertaking....", the bit from 'where' onwards could be read as defining business expenses rather than qualifying them, i.e. the mere fact of using a business card makes it a business expense....