Which type of card charges a merchant more; a debit or credit card?

lr1277

I could have put this question in the credit card forum, the charities forum and this forum. So I chose this forum.

I am trying to work out which type of card charges a merchant higher fees; a debit card or a credit card?

I have looked on the internet and it says Visa and Mastercard charge between 2% and 3%.

Now about 15-16 years ago, debit cards used to charge a flat fee of 50p IIRC. However credit cards have always charged a % of the transaction.

But now it seems both credit and debit cards charge a % of the transaction. Between 0.2% and 0.3% according to the internet.

Is there a way of working out how each type of card charges fees and how much they charge for a given transaction? I am asking because I want to donate to charity and so want them to get the most possible.

I have also emailed the charity to ask if I can donate by bank transfer. But I suspect there may be problems with that because they won't know who made the donation. And also they can't claim giftaid.

jimjames

lr1277 said:

I could have put this question in the credit card forum, the charities forum and this forum. So I chose this forum.

I am trying to work out which type of card charges a merchant higher fees; a debit card or a credit card?

I have looked on the internet and it says Visa and Mastercard charge between 2% and 3%.

Now about 15-16 years ago, debit cards used to charge a flat fee of 50p IIRC. However credit cards have always charged a % of the transaction.

But now it seems both credit and debit cards charge a % of the transaction. Between 0.2% and 0.3% according to the internet.

Is there a way of working out how each type of card charges fees and how much they charge for a given transaction? I am asking because I want to donate to charity and so want them to get the most possible.

I have also emailed the charity to ask if I can donate by bank transfer. But I suspect there may be problems with that because they won't know who made the donation. And also they can't claim giftaid.

Is direct debit an option? That's probably cheapest for them to process although one off might not be - could you split the amount over a year if it's significant enough, if it's not then charges aren't likely to make such a massive difference

Grabs39

lr1277 said:

I have also emailed the charity to ask if I can donate by bank transfer. But I suspect there may be problems with that because they won't know who made the donation. And also they can't claim giftaid.

Worth seeing what they say about that.  I make a Faster Payment to my Church every month with my name as the reference - the Church treasurer does claim Gift Aid on it.  It's actually the most efficient ways to give where card payments aren't available (less work for the treasurer than cash and cheques).

lr1277

The charity in question is Comic Relief.
I don’t want them to claim giftaid because my income is variable and uncertain. I am not sure how much tax I am going to pay till early April. I suppose I could wait till then to make the donation to ensure I am paying enough tax to support giftaid for the charity.
If I donate through the website and choose to pay by card, at least I can specify they shouldn’t claim giftaid. 

Which brings me back to which payment type charges the lowest fee?
Worst comes to the worst, I will pick a card and donate as much as I can and not worry about the fees.

etienneg

Credit cards cost more than debit cards. That's why it's almost impossible to find a car dealer that will accept credit cards for more than a small proportion of the cost of a car, for example a deposit. But it's impossible for you to calculate the costs in a particular case as the merchant's contract with the card company is specific to that merchant. There's no standard fee across the industry and it may well be confidential between merchant and card company.

However, unless the amount is on the Bill Gates scale I suggest you choose a payment method that the charity offers rather than trying to arrange something special. I appreciate that you are thinking of the charity, but do please remember that there are costs for anything the charity has to do. Even reading your email and replying will take time that has to be paid for - not just the amount the employee is paid but employer's NI, pension and overheads such as computer/internet, desk space/heating etc. (or contribution to costs if the employee is working from home). Being involved with charities it's amazing how many very well-intentioned people completely forget this, and can easily end up involving the charity in unnecessary expense.

lr1277

etienneg said:

Credit cards cost more than debit cards. That's why it's almost impossible to find a car dealer that will accept credit cards for more than a small proportion of the cost of a car, for example a deposit. But it's impossible for you to calculate the costs in a particular case as the merchant's contract with the card company is specific to that merchant. There's no standard fee across the industry and it may well be confidential between merchant and card company.

However, unless the amount is on the Bill Gates scale I suggest you choose a payment method that the charity offers rather than trying to arrange something special. I appreciate that you are thinking of the charity, but do please remember that there are costs for anything the charity has to do. Even reading your email and replying will take time that has to be paid for - not just the amount the employee is paid but employer's NI, pension and overheads such as computer/internet, desk space/heating etc. (or contribution to costs if the employee is working from home). Being involved with charities it's amazing how many very well-intentioned people completely forget this, and can easily end up involving the charity in unnecessary expense.

Thanks. Will use the debit card.

ratechaser

lr1277 said:

The charity in question is Comic Relief.
I don’t want them to claim giftaid because my income is variable and uncertain. I am not sure how much tax I am going to pay till early April. I suppose I could wait till then to make the donation to ensure I am paying enough tax to support giftaid for the charity.
If I donate through the website and choose to pay by card, at least I can specify they shouldn’t claim giftaid. 

Which brings me back to which payment type charges the lowest fee?
Worst comes to the worst, I will pick a card and donate as much as I can and not worry about the fees.

You have it the wrong way round re GiftAid - you don't opt out, you opt in. Charities have to be able to demonstrate that donors have consented to a donation being treated as eligible, as well as confirmed that the sum received is a true personal donation. They get periodically audited by HMRC on their record keeping. So if you send money by bank transfer, then it won't be gift aided - provided you haven't previously consented to donations to that charity being treated as gift aid (that's an important point - if you've donated in the past few years, any gift aid declarations will often cover future donations made).

By the way, I've done volunteer work conducting second line checks of a charity's GA records before sending the tax claim in to HMRC, so I'm not unfamiliar with this...

AstonSmith

The cost depends on the contract with the merchant. I can give you the gist of the one at my workplace, in order of cost magnitude:

• VISA costs slightly more than MasterCard. American Express is more than those two.
  
• Credit costs slightly more than debit.
• International cards (i.e. not UK or, at the moment, EU/EEA) cost an absolute fortune.

lr1277

ratechaser said:

lr1277 said:

The charity in question is Comic Relief.
I don’t want them to claim giftaid because my income is variable and uncertain. I am not sure how much tax I am going to pay till early April. I suppose I could wait till then to make the donation to ensure I am paying enough tax to support giftaid for the charity.
If I donate through the website and choose to pay by card, at least I can specify they shouldn’t claim giftaid. 

Which brings me back to which payment type charges the lowest fee?
Worst comes to the worst, I will pick a card and donate as much as I can and not worry about the fees.

You have it the wrong way round re GiftAid - you don't opt out, you opt in. Charities have to be able to demonstrate that donors have consented to a donation being treated as eligible, as well as confirmed that the sum received is a true personal donation. They get periodically audited by HMRC on their record keeping. So if you send money by bank transfer, then it won't be gift aided - provided you haven't previously consented to donations to that charity being treated as gift aid (that's an important point - if you've donated in the past few years, any gift aid declarations will often cover future donations made).

By the way, I've done volunteer work conducting second line checks of a charity's GA records before sending the tax claim in to HMRC, so I'm not unfamiliar with this...

Whilst I have read about charities continuing to claim giftaid if you have allowed giftaid before it hadn't truly sunk in. Thank you for reminding me.

There is a high probability when I had a regular income, I contributed to Comic Relief and would have allowed Giftaid.

Since losing my regular income, I have never allowed Giftaid when making contributions to charities.

MrFrugalFever

Bank transfer (free) or debit card (0.1-0.4%) will be the cheapest options. Credit card is anything up to 3% merchant fee rates I believe.

[Deleted User]

lr1277 said:

etienneg said:

Credit cards cost more than debit cards. That's why it's almost impossible to find a car dealer that will accept credit cards for more than a small proportion of the cost of a car, for example a deposit. But it's impossible for you to calculate the costs in a particular case as the merchant's contract with the card company is specific to that merchant. There's no standard fee across the industry and it may well be confidential between merchant and card company.

However, unless the amount is on the Bill Gates scale I suggest you choose a payment method that the charity offers rather than trying to arrange something special. I appreciate that you are thinking of the charity, but do please remember that there are costs for anything the charity has to do. Even reading your email and replying will take time that has to be paid for - not just the amount the employee is paid but employer's NI, pension and overheads such as computer/internet, desk space/heating etc. (or contribution to costs if the employee is working from home). Being involved with charities it's amazing how many very well-intentioned people completely forget this, and can easily end up involving the charity in unnecessary expense.

Thanks. Will use the debit card.

This is not always true - many payment services charge a flat percentage for all cards they accept.

Faster Payment/Cheque are usually free or have a small fixed fee for a charity.