Pay penny items with credit cards. What will happen ??

adindas
adindas Posts: 6,803
First Anniversary Name Dropper First Post
Forumite
edited 23 September 2023 at 10:19AM in Credit cards
I know there have been previous discussions about paying for items that cost less than 5p (let's say) with a credit card. Some merchants may not take such low-value payments. So, if you rely on a seldom-used credit card for a monthly direct debit (if needed), you might encounter issues meeting the direct debit requirement.

However, it seems that the trend has changed. I have personally tried a few times with several credit cards linked to PayPal. I have attempted with Halifax, Santander and HSBC, and they took payments as low as 2p. >:)

I am about to try with other credit cards.

What has been your recent experience? Do they accept payments of less than 5p (let's say)?

It is also good when you name the credit card and the merchant's.



Comments

  • la531983
    la531983 Posts: 1,641
    First Post Name Dropper
    Forumite
    Why wouldn't they?

    The only restriction is going to be at the retailer end, some such as TUI only accept minimum £1 online payments. I regularly do credit and debit card payments for pennies. 
  • What on earth do you buy for less than 5p?

    You used to see hand written signs saying "Minimum card spend £5" - not so much now.

    I would imagine some small merchants will have a minimum transaction charge from the card services provider and would not want any trivial charges. Having said that the banks probably charge for handling cash too!

  • adindas
    adindas Posts: 6,803
    First Anniversary Name Dropper First Post
    Forumite
    edited 23 September 2023 at 9:34AM
    la531983 said:
    Why wouldn't they?

    The only restriction is going to be at the retailer end, some such as TUI only accept minimum £1 online payments. I regularly do credit and debit card payments for pennies. 

    Not in the past. It is something to do with minimum charge from the card providers. Keep in mind this is Creditcard, not debitcard. There were already a few reports about this in the past. Also based on my personal experience in the past.

  • la531983
    la531983 Posts: 1,641
    First Post Name Dropper
    Forumite
    edited 23 September 2023 at 9:40AM
    adindas said:
    la531983 said:
    Why wouldn't they?

    The only restriction is going to be at the retailer end, some such as TUI only accept minimum £1 online payments. I regularly do credit and debit card payments for pennies. 

    Not in the past. It is something to do with minimum charge from the card providers. Keep in mind this is Creditcard, not debitcard. There were already a few reports about this in the past. Also based on my personal experience in the past.

    I used a credit card in Asda the other week for 1p. Poured all my spare change in and I was a penny short. 
    No issue at all. 
    As I said, minimum spends are set by retailers rather than card processors. At least that is how it works now.

    Online you will have websites that stop you putting in amounts less than maybe a quid (the TUI example I gave as an example, Gofundme doesn't do transactions under £2 iirc) but that won't be a request from the card processor. 
  • WillPS
    WillPS Posts: 3,017
    First Post Name Dropper First Anniversary
    Forumite
    Acquiring banks will often charged merchants a fixed amount per transaction, either instead of or usually as well as a % of transaction. Merchants used to set a minimum payment to offset this fixed charge.

    You do occasionally find merchants with a minimum, usually £1-3. Most recently I experienced this in a charity shop.
  • A big food retailer such as Tesco, Sainsbury's Waitrose etc. will be paying a small fee per transaction and then also a percentage of the transaction on credit card payments, likely less than 5p per transaction and 0.5% percentage on credit cards and the percentage might even be capped. Smaller retailers will be paying 10-20p per transaction and potentially 0.7-1.2% per transaction, others will pay no fixed fee, but a higher percentage of 1.5-2.0%, but likely with a minimim charge of around 10p.

    Going back 20 years there uses to be an anomaly with Tesco's tills where if the transaction was less than 40p and you paid with a credit card it would process the transaction and you would get a receipt, but it would never actually change to your card, you got the item for free, if you could be bothered to go through the till multiple times then you could have as many <40p items as you wanted for free, provided you only did one at a time.
  • Nebulous2
    Nebulous2 Posts: 5,063
    First Anniversary Name Dropper First Post
    Forumite
    I've seen some people on here saying that their credit card wrote off very small payments, rather than collecting them, so you could find that it doesn't trigger a DD anyway. 
  • A big food retailer such as Tesco, Sainsbury's Waitrose etc. will be paying a small fee per transaction and then also a percentage of the transaction on credit card payments, likely less than 5p per transaction and 0.5% percentage on credit cards and the percentage might even be capped. Smaller retailers will be paying 10-20p per transaction and potentially 0.7-1.2% per transaction, others will pay no fixed fee, but a higher percentage of 1.5-2.0%, but likely with a minimim charge of around 10p.

    Going back 20 years there uses to be an anomaly with Tesco's tills where if the transaction was less than 40p and you paid with a credit card it would process the transaction and you would get a receipt, but it would never actually change to your card, you got the item for free, if you could be bothered to go through the till multiple times then you could have as many <40p items as you wanted for free, provided you only did one at a time.
    Unless their costs have gone up the one time I saw one of the large supermarkets fee structure it was a lot less than 5p + 0.5%

    I remember a while back there was a lot of talk of Micropayments and certainly some did introduce reduced fees for payments of £1 and under. These days searches are dominated by the likes of Zettle that tend to be no fixed charge so it's harder to see what the more traditional routes are offering these days. 
Meet your Ambassadors

Categories

  • All Categories
  • 341.6K Banking & Borrowing
  • 249.6K Reduce Debt & Boost Income
  • 449.1K Spending & Discounts
  • 233.6K Work, Benefits & Business
  • 605.9K Mortgages, Homes & Bills
  • 172.3K Life & Family
  • 246.5K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 15.8K Discuss & Feedback
  • 15.1K Coronavirus Support Boards