Co-op bank Everyday rewards - Changes from 1st August 2020

masonic

gsmh said:

bristolleedsfan said:

The Co-operative Bank wants people to do as many  DC transactions up to maxiimum 60 per month because it makes money out of them

Ahh, and there was me thinking they wanted you to use the account as your main current account. I hadn't realised they wanted you to use it simply to get the reward in full. How much money do they make when people make 60 x 1p transactions?

"Banks typically charge large retailers between 10p and 20p for each debit card transaction, or 0.6% for credit cards."

https://www.bbc.co.uk/news/business-40648641

So 60 debit card transactions could earn Co-op £6+, of which it passes £3 on to the customer. Even if charges have fallen in the last 3 years, it seems clear the Co-op is incentivising customers to earn the bank more revenue. The real loser is the retailer.

Interesting variation on this epic thread: https://forums.moneysavingexpert.com/discussion/6027696/serial-switching-for-rewards-not-good

In this case it could be argued the offer, and those who take advantage of it, are causing harm.

NottinghamKnight

I thought that debit cards had moved over to percentage charging as well, though there are no doubt a range of deals and agreements between card providers and large and small retailers. The fact that many car dealers wont take debit card payments for five figure purchases for example wold certainly suggest so, can't see them refusing debit cards if they are only being charged 10p.

[Deleted User]

NottinghamKnight said:

I thought that debit cards had moved over to percentage charging as well, though there are no doubt a range of deals and agreements between card providers and large and small retailers. The fact that many car dealers wont take debit card payments for five figure purchases for example wold certainly suggest so, can't see them refusing debit cards if they are only being charged 10p.

That BBC article was pre the EU changes as interchange fee was capped to match up with the ban on payments.
I doubt that Co-op bank is making money - much more likely they are breaking even or it's a loss leader. 

masonic

NottinghamKnight said:

I thought that debit cards had moved over to percentage charging as well, though there are no doubt a range of deals and agreements between card providers and large and small retailers. The fact that many car dealers wont take debit card payments for five figure purchases for example wold certainly suggest so, can't see them refusing debit cards if they are only being charged 10p.

Smaller retailers pay a lot more than large ones. They often use third party processing services and those may operate on a per transaction AND percentage basis. For example, Stripe currently charges 20p + 1.4% on debit card transactions.

dahj said:

NottinghamKnight said:

I thought that debit cards had moved over to percentage charging as well, though there are no doubt a range of deals and agreements between card providers and large and small retailers. The fact that many car dealers wont take debit card payments for five figure purchases for example wold certainly suggest so, can't see them refusing debit cards if they are only being charged 10p.

That BBC article was pre the EU changes as interchange fee was capped to match up with the ban on payments.
I doubt that Co-op bank is making money - much more likely they are breaking even or it's a loss leader. 

The interchange fee cap came into effect in 2015 (https://www.legislation.gov.uk/uksi/2015/1911), two full years before the BBC article was written, see also https://www.psr.org.uk/psr-focus/card-payments/ifr It represents a "weighted average interchange fees for domestic debit card transactions", meaning that fees on smaller transactions may be higher providing there are sufficient high value transactions with lower fees to bring the average down. Interchange fees are one part of the charge levied on retailers - the part that would go to the card issuer - whereas the BBC figure will include charges levied by the large retailer's own bank as well. Those caps may have been reduced since the BBC article was written.

It's unlikely to be a loss leader, remember that they changed their offer over the summer from paying customers for up to 30 debit card transactions to up to 60. It's possible the payment of 5p per debit card transaction is reflective of what they earn (equivalent to 0.2% on an average transaction value of £25). If the average gets dragged down by lots of people gaming the offer and doing lots of low value transactions, then the offer could become even less generous. The argument that 60 debit card transactions per month is a measure of 'normal' use of a 'main current account' is not at all plausible.

NottinghamKnight

That still doesn't explain why major car retailers won't accept debit cards in the main, these are large listed companies worth hundreds of millions. Wouldn't have thought they would be using small intermediary card providers and there still seems to be a percentage basis, I'm talking about the likes of Pendragon, Evans Halshaw and large main dealers. 

masonic

NottinghamKnight said:

That still doesn't explain why major car retailers won't accept debit cards in the main, these are large listed companies worth hundreds of millions. Wouldn't have thought they would be using small intermediary card providers and there still seems to be a percentage basis, I'm talking about the likes of Pendragon, Evans Halshaw and large main dealers. 

Superdrug is an example of a major retailer that has annual revenues of >£1.2b who use World Pay as an intermediary to process some or all of their card transactions. World Pay charges a pay as you go rate of 20p + 2.75% for processing transactions, but I'm sure a major player gets access to much better rates.

You've made a couple of assumptions, which do warrant further exploration:

- That Pendragon doesn't accept debit cards because of fees. If you haven't been told this by someone in a relevant position (i.e. someone responsible for policy within their finance department, not the sales guy or store manager), then it cannot be assumed. There are other plausible reasons why they might not like debit card payments, such as difficulty authorising the often high value transactions, past issues with fraud and chargebacks, or simply that the policy has persisted from a time when there were difficulties or costs associated with processing these payments that no longer exist today.

- That those fees must be percentage fees only, rather than a combination of a fixed and percentage fee. Either of these charging methods would lead to near identical costs for high value transactions.

I can't think of a good reason why they wouldn't accept debit card payments, but it seems unlikely to be related to processing fees at all, after all there is usually more wiggle room in the sale price of a vehicle than would be lost in accepting a payment by debit card.

NottinghamKnight

Yes, default t and cs for Evans Halshaw for example state they won't accept debit cards or credit cards, may not be solely cost/ charging reason I guess. I purchased a car in 2014 from a small main dealer, everything went through with a debit card payment straight away. Bought similarly earlier this year and after accepting a credit card deposit balance had to be by bank transfer, which was easily done using a banking app at the dealership on collection. 

masonic

NottinghamKnight said:

Yes, default t and cs for Evans Halshaw for example state they won't accept debit cards or credit cards, may not be solely cost/ charging reason I guess. I purchased a car in 2014 from a small main dealer, everything went through with a debit card payment straight away. Bought similarly earlier this year and after accepting a credit card deposit balance had to be by bank transfer, which was easily done using a banking app at the dealership on collection. 

Seems to be a very uncommon position for them to take. Suspect the real reason is there is less chance of a FP being blocked and the customer having to call their bank from the dealership, then find they can't remember the answers to their security questions etc etc.

If you dig into the old posts on this forum you can see paying for cars using a debit card has been commonplace for many years, for example: https://forums.moneysavingexpert.com/discussion/2783500/purchasing-a-car-using-a-debit-card and https://forums.moneysavingexpert.com/discussion/5415198/paying-a-big-amount-by-debit-card

It's off this forum, but this thread is a very amusing read: https://www.overclockers.co.uk/forums/threads/vw-dealer-wont-accept-debit-card-payment.18635858/

ZeroSum

NottinghamKnight said:

Yes, default t and cs for Evans Halshaw for example state they won't accept debit cards or credit cards, may not be solely cost/ charging reason I guess. I purchased a car in 2014 from a small main dealer, everything went through with a debit card payment straight away. Bought similarly earlier this year and after accepting a credit card deposit balance had to be by bank transfer, which was easily done using a banking app at the dealership on collection. 

Did they tell you that before making the deposit?
I bought a new car early this year, and paid deposit on card. I eventually went through the finance as I got a better deal, but when I was looking at options (one of which was chucking a big amount on a 0% credit card) they never said you couldn't.
Would've been a bit awkward if afterwards I couldn't, which meant I wouldn't have cash accessible to pay. 

Markyboy112

Has anyone managed to get more then 1 account for this