Extra charge levied by retailers for using a credit card

Altarf

Going back about 20 years, it used to be illegal for companies to charge a surcharge if you paid by credit card. The law was changed, and now retailers can do what they like provided it is made clear to the consumer.

In the USA credit card companies will not allow retailers to accept their cards unless they comply with their terms, one of which is that they cannot surcharge customers.

In the UK, for the card companies to achieve the same result, they would all have to agree to impose the same condition (otherwise if Mastercard did and VISA didn't the retailers would drop Mastercard) and the UK courts take a very dim view of cartels.

At the end of the day it comes down to the consumer. If everyone when they got to the point of payment and the surcharge was mentioned said 'oh forget it then', leaving the retailer with the holiday, the trolley of goods, or whatever, the retailers would soon change their mind about surcharges.

michaels

Ryanair always annoy me when it comes to this issue (although I am no sure if you are allowed to criticise them on this site as they are Martin's favourites where he has had a monthly price checker written cos the ryanair website doesn't have a decent calandar price view) - as they are an internet/phone booking operation, payment by means other than a debit or credit card is not possible and yet both of these methods faces a surchage - ie they have taken part of the ticketcost and removed it from the ex 'taxes' price they love to quote all over their website. Plus the debit card fee is per person flight sector even tho they obviously only pay a single transaction charge - surely it should be illegal to present such a charge as a card charge when it so obviously isn't?

Stonk

payment by means other than a debit or credit card is not possible and yet both of these methods faces a surchage

Ah - now that spawns another question: I always thought you could be charged an extra fee for paying by credit card, but *not* if you paid by debit card. What's the latest on this?

lipidicman

doodle_bug wrote:

You are right, but I could see where xbigman was coming from.

VAT is worked out differently to normal % equations 17.5% of 117.50 is over 20. But, to work the VAT out you divide the inclusive price by 117.5 and multiply by 100 eg. £167 inc VAT is £142 ex VAT aprox. If you did £167 minus 17.5 % it would be £137 aprox. Clear as mud!!!

It isnt 'worked out differently to normal % equations'. The problem is understanding what you are taking 17.5% of:

£100 (ex Vat) + £17.50 (VAT) = £117.5 (inc VAT), OK?

mathematically, the inc VAT price is
100 x (1+17.5/100) = 117.50
in general,
excVAT X (1+VAT%/100)=incVAT

So to get the VAT from the price you pay you first rearrange the above to
incVAT/(1+VAT%/100)=excVAT
ie 117.5/1.175 = £100
then subtract this from the inclusive price
VAT=incVAT-excVAT=117.5-100 = £17.50

The main problem is people tend to take 17.5% of the price paid, which is wrong. The 17.5% is '17.5% of the VAT exclusive price'

Rafter

Visa and Mastercard have separate european and US operations so the rules are different.

Only in the UK for example do we have 'section 75' protection, where the credit card company is jointly liable if something goes wrong or the travel company goes bust.

As a result Visa and Mastercard UK charge travel companies more for credit cards.

The banks also got themselves into a bit of a pickle with the regulators, government and retailers over switch. As a result debit cards are really cheap for retailers and therefore more attractive.

My personal view is that there should be no premium for using a credit card but there ought to be a discount for using a debit card rather than a credit card or cheque if there is a genuine saving for the retailer to be passed on.

You can't have your cake and eat it though. If you want interest free period on credit cards, protection if the retailer goes bust and cashback that has to be paid for somehow. Some of it comes from the interest and charges made to other customers but the retailer has to pay some fees too.

R.

Cryogenic

Yesterday I was charged a flat rate 70p charge for using a credit card in IKEA. I wonder if they charge you 70p if you use an IKEA credit card that they were pushing applications for on the way in to the store.

MarkyMarkD

Stonk wrote:

Ah - now that spawns another question: I always thought you could be charged an extra fee for paying by credit card, but *not* if you paid by debit card. What's the latest on this?

You can be charged extra for any payment method, as long as it's clearly advised to you. Ryanair and other sites are (presumably) compliant as they do mention the charges in their adverts.