Curve just screwed themselves over

master811

Terry_Towelling wrote: »

The MCC is assigned to a retailer by his processing bank when they sign up to process their transactions. There are hundreds of different MCCs (search MasterCard Merchant Category Codes online). When you transact with a retailer (with any card) the transaction will be processed through to the card issuer with that MCC.

Curve acts as a card issuer in the first part of any Curve transaction and will receive an MCC in the transaction message from the retailers bankers. Curve then 'converts' itself into a retailer/acquirer and sends the transaction through to your actual card issuer. All they need to do is replicate the MCC in the original transaction message. For ATM cash the MCC is 6011.

This piece of data alone isn't necessarily what drives the cash advance handling fee. I suspect it is impossible to send a transaction with 6011 as the MCC unless you also include a Transaction Code of '07'. If they try to send 6011 with a Transaction Code of '05' (purchase) the transaction will likely be rejected back to Curve.

Sorry if this is boring but the whole issue is likely connected to fees payable by Curve. It is likely that when you take ATM cash on Curve, Curve may have to pay the ATM operator a fee. If that transaction is then sent on as an '05' (purchase) Curve will have to pay another fee to the card issuer (an interchange fee). If Curve sends the transaction on as '07' (cash) with an MCC of 6011 (ATM) they will receive a fee from the card issuer.

It is this fee mechanism that drives your issuer to impose a cash advance handling charge. This fee is also part of what enables your card issuer to offer you cashback on purchases.

This is all very well, but they already restricted CC usage from ATMs (likely as a result of the fees that would have to pay), so it can't be the only reason they have done this...

Terry_Towelling

master811 wrote: »

This is all very well, but they already restricted CC usage from ATMs (likely as a result of the fees that would have to pay), so it can't be the only reason they have done this...

I said it was 'likely' connected to the fee issue. I would also guess that they have come under significant pressure from all in the cards industry to profile transactions correctly. Their assertion that there are only a handful of business types in existence is naïve and it perhaps shows they didn't look closely enough at what they were doing when they were set up.

Any 'interchange' differences between 'debit' and 'credit' transactions may also be catching them out - although I understand there are moves to make debit card interchange fees comparable to credit card interchange fees. Who knows what lies beneath or whether their business model is viable in the long-term?

Stuart_W

Terry_Towelling wrote: »

Who knows what lies beneath or whether their business model is viable in the long-term?

Indeed. I really can't see where the long term profitable business model is in Curve. Enjoy it whilst it works the way it does, but at somepoint all that Fintech investor cash will dry up if no returns are anywhere on the horizon.

There needs to be a solution to the trial-an-error "will I be charged?" issue Perhaps MSEers can confirm via this board where charges do and don't appear - but then that might be card issuer specific, too, so might be very complicated.

jtgaoler

I suspect it is impossible to send a transaction with 6011 as the MCC unless you also include a Transaction Code of '07'. If they try to send 6011 with a Transaction Code of '05' (purchase) the transaction will likely be rejected back to Curve.

Well, topping up Starling/paying HMRC shows as "Business Services" in the Curve app, so it may be that the MMC is perhaps "7399 Business Services, Not Elsewhere Classified" or something, in which case certain 'cashlike' transactions may well go through to an underlying CC as purchases....



That would be consistent with the argument for the latest change being the underlying fees Curve was paying for cash from ATMs

Terry_Towelling

Stuart_W wrote: »

There needs to be a solution to the trial-an-error "will I be charged?" issue Perhaps MSEers can confirm via this board where charges do and don't appear - but then that might be card issuer specific, too, so might be very complicated.

Ideally, if someone from Curve could confirm that a true cash transaction will indeed be processed to an underlying CC as 'Cash' (i.e. TC 07 and MCC 6011) then it is odds on you will get a cash handling fee from your issuer.

Terry_Towelling

jtgaoler wrote: »

Well, topping up Starling/paying HMRC shows as "Business Services" in the Curve app, so it may be that the MMC is perhaps "7399 Business Services, Not Elsewhere Classified" or something, in which case certain 'cashlike' transactions may well go through to an underlying CC as purchases....

That would be consistent with the argument for the latest change being the underlying fees Curve was paying for cash from ATMs

Been so long since I worked in cards that I can't remember all the rules that distinguish cash from cash-like (or quasi-cash) transactions. The rules have doubtless changed since then anyway.

Paying your tax bill to HMRC should have MCC 9311 and it might be deemed to be a straight purchase because you never actually take possession of any cash in the process of paying, neither do you gain anything that is readily convertible into cash - rather you are paying a bill in much the same way as paying a speeding fine (MCC 9222) having your car serviced (MCC 5511) or buying a new wig (MCC 5698).

jtgaoler

Response from Curve is for a Starling topup via Google Pay onto an underlying CC...

Your underlying card will now see this transaction with the Merchant Category Code 6012 (Merchandise and Services—Customer Financial Institution).

john1002

Does that mean it will show as a cash advance with your credit card?

John

bxboards

john1002 wrote: »

Does that mean it will show as a cash advance with your credit card?

John

I suspect it will be up to the provider.

While Curve used a generic MCC, then I guess most things worked without charge, now I imagine it will be easier to block.

I suspect it'll be much harder to use Curve with a credit card for many transactions due to the increased granularity.

I don't see this move being of benefit to Curve customers, no matter how they try to spin it.

Terry_Towelling

MCC 6012 is not a cash advance (in my book). It is as it says, the purchase of services or goods from a financial institution.

That shouldn't attract a cash advance handling charge from the underlying CC issuer because they will see it as a purchase and be happy to receive their interchange fee credit from Curve. Remember, your CC issuer will only assess you a cash handling fee if they have had to pay away an interchange fee as part of the transaction process.

At the end of the day, I'm still only making a 'best guess' here because (apart from having an MCC) I don't know exactly how Curve processes its transactions on to the underlying/linked CC issuer - I am assuming (dangerous) that it submits them through Visa/MasterCard.