HSBC: "cash-related payment" fee charged when paid for broker subscription

Ulrich

Hi All,

I recently paid for my Freetrade Plus subscription (which allows me to access more stocks) with HSBC credit card.
They charged me 2.99% for making a "cash-related payment" using credit card.

Am I the only one that think it's crazy to treat such payment as cash-related? I don't get any of the money back, it's like a Netflix subscription.

And shouldn't Freetrade warn their customers trying to pay with a credit card that they may incur additional charges from a bank?
Yes, they have a FAQ article about that but who reads FAQ articles if it's just a payment and it normally doesn't matter if you use debit or credit card unless it explicitly says something like "you'll be charged XXX if pay with a credit card" at a payment page?

It looks like both parties didn't do they best to prevent situations like that and they are happy with how it is.

Is there anything I could do about the whole situation to a) get that fee back and b) make Freetrade warn their customers before making payments using a credit card?

molerat

It is 100% down to Freetrade as they are the only ones that are aware of the MCC in use, which will be the deciding factor on a cash transaction charge, ahead of you making a transaction.  I suspect the same code is in use for a subscription fee as there is for a purchase. As a rule of thumb never pay a financial institution with a credit card.  HSBC could waive the charge if you ask them nicely explaining it is a "membership fee" rather than a financial transaction, they don't have to though.  The other option is to make a complaint to Freetrade for not flagging it clearly.

Ulrich

molerat said:

It is 100% down to Freetrade as they are the only ones that are aware of the MCC in use, which will be the deciding factor on a cash transaction charge, ahead of you making a transaction.  I suspect the same code is in use for a subscription fee as there is for a purchase. As a rule of thumb never pay a financial institution with a credit card.  HSBC could waive the charge if you ask them nicely explaining it is a "membership fee" rather than a financial transaction, they don't have to though.  The other option is to make a complaint to Freetrade for not flagging it clearly.

I totally agree with you.

I actually had a very similar situation 2 years (same culprits) ago but obviously forgot about that completely when it was a last minute chance to grab a Black Friday 50% off subscription
The funny thing was Freetrade that time showed a warning AFTER I paid.
I complained to both parties.
HSBC explained why they charged me, don't remember if they waived the charge.
Freetrade paid me £4.99

The funny thing is this time there was no warning at all, I learnt about the fee from my CC statement.

gt94sss2

Ulrich said:

Hi All,

I recently paid for my Freetrade Plus subscription (which allows me to access more stocks) with HSBC credit card.
They charged me 2.99% for making a "cash-related payment" using credit card.

Am I the only one that think it's crazy to treat such payment as cash-related? I don't get any of the money back, it's like a Netflix subscription.

I think you would struggle to find a credit card which would NOT charge you for using it at a broker 

This is not down to HSBC - they have no knowledge of what the transaction is - only what the MCC they are presented with. 

born_again

Your paying for a financial service.

Ulrich

gt94sss2 said:

Ulrich said:

Hi All,

I recently paid for my Freetrade Plus subscription (which allows me to access more stocks) with HSBC credit card.
They charged me 2.99% for making a "cash-related payment" using credit card.

Am I the only one that think it's crazy to treat such payment as cash-related? I don't get any of the money back, it's like a Netflix subscription.

I think you would struggle to find a credit card which would NOT charge you for using it at a broker 

This is not down to HSBC - they have no knowledge of what the transaction is - only what the MCC they are presented with. 

I understand that, but my transaction receipt clearly shows that it's a subscription payment, not something "cash-related".

Ulrich

born_again said:

Your paying for a financial service.

sounds like I shouldn't pay my financial advisor with a credit card, right?

gt94sss2

Ulrich said:

gt94sss2 said:

Ulrich said:

Hi All,

I recently paid for my Freetrade Plus subscription (which allows me to access more stocks) with HSBC credit card.
They charged me 2.99% for making a "cash-related payment" using credit card.

Am I the only one that think it's crazy to treat such payment as cash-related? I don't get any of the money back, it's like a Netflix subscription.

I think you would struggle to find a credit card which would NOT charge you for using it at a broker 

This is not down to HSBC - they have no knowledge of what the transaction is - only what the MCC they are presented with. 

I understand that, but my transaction receipt clearly shows that it's a subscription payment, not something "cash-related".

The credit card company doesn't have that level of detail. It only knows you used your credit card at Freetrade and the associated merchant category code.

The MCC will be one they consider to be "cash related" regardless of the transaction.

DullGreyGuy

molerat said:

It is 100% down to Freetrade as they are the only ones that are aware of the MCC in use, which will be the deciding factor on a cash transaction charge, ahead of you making a transaction.  I suspect the same code is in use for a subscription fee as there is for a purchase. As a rule of thumb never pay a financial institution with a credit card. 

It's not 100% down to them as it's HSBC that determines the terms of the card and which MCCs they are going to treat as cashlike. My AmEx card doesn't have a cash like transaction clause and so I would be able to buy the same subscription without the risk of a fee (assuming they take AmEx.

Its more nuanced that just not paying financial institutions, many people pay for their insurance by credit card and no one treats home insurance as a cash like transaction. 

Ulrich said:

They charged me 2.99% for making a "cash-related payment" using credit card.

Am I the only one that think it's crazy to treat such payment as cash-related? I don't get any of the money back, it's like a Netflix subscription.

And shouldn't Freetrade warn their customers trying to pay with a credit card that they may incur additional charges from a bank?
Yes, they have a FAQ article about that but who reads FAQ articles if it's just a payment and it normally doesn't matter if you use debit or credit card unless it explicitly says something like "you'll be charged XXX if pay with a credit card" at a payment page?

FreeTrade is an investment company as such buying investments with a credit card would be considered cash like transaction. They have chosen not to try and get a second MCC for their subscription services (or have and been told it will have the same MCC) which would enable card issuers to differentiate between investments and purchases of other services. 

There are thousands of card issuers in the world, many offer multiple different products with different T&Cs. It would be exceptionally difficult for any website to know how every single card issuer is going to treat their transactions and present various different warnings. With some card issuers their BIN are not very precise and so all the website will know is its a debit or credit card from X bank in Y country using Visa/Mastercard/AmEx network so wouldn't have the grain of detail to know if its their Gold card that has a 0.25% fee on all transactions or their Black card that is fee free. 

Ulrich

DullGreyGuy said:

molerat said:

It is 100% down to Freetrade as they are the only ones that are aware of the MCC in use, which will be the deciding factor on a cash transaction charge, ahead of you making a transaction.  I suspect the same code is in use for a subscription fee as there is for a purchase. As a rule of thumb never pay a financial institution with a credit card. 

It's not 100% down to them as it's HSBC that determines the terms of the card and which MCCs they are going to treat as cashlike. My AmEx card doesn't have a cash like transaction clause and so I would be able to buy the same subscription without the risk of a fee (assuming they take AmEx.

Its more nuanced that just not paying financial institutions, many people pay for their insurance by credit card and no one treats home insurance as a cash like transaction. 

Ulrich said:

They charged me 2.99% for making a "cash-related payment" using credit card.

Am I the only one that think it's crazy to treat such payment as cash-related? I don't get any of the money back, it's like a Netflix subscription.

And shouldn't Freetrade warn their customers trying to pay with a credit card that they may incur additional charges from a bank?
Yes, they have a FAQ article about that but who reads FAQ articles if it's just a payment and it normally doesn't matter if you use debit or credit card unless it explicitly says something like "you'll be charged XXX if pay with a credit card" at a payment page?

FreeTrade is an investment company as such buying investments with a credit card would be considered cash like transaction. They have chosen not to try and get a second MCC for their subscription services (or have and been told it will have the same MCC) which would enable card issuers to differentiate between investments and purchases of other services. 

There are thousands of card issuers in the world, many offer multiple different products with different T&Cs. It would be exceptionally difficult for any website to know how every single card issuer is going to treat their transactions and present various different warnings. With some card issuers their BIN are not very precise and so all the website will know is its a debit or credit card from X bank in Y country using Visa/Mastercard/AmEx network so wouldn't have the grain of detail to know if its their Gold card that has a 0.25% fee on all transactions or their Black card that is fee free. 

Do I get it right that TLDR is nobody but a customer is at fault for paying with a credit card?
Honestly, don't see a need for any website to differentiate between different types of products - it should display a warning IF it's a credit card, simples.

DullGreyGuy

Ulrich said:

DullGreyGuy said:

molerat said:

It is 100% down to Freetrade as they are the only ones that are aware of the MCC in use, which will be the deciding factor on a cash transaction charge, ahead of you making a transaction.  I suspect the same code is in use for a subscription fee as there is for a purchase. As a rule of thumb never pay a financial institution with a credit card. 

It's not 100% down to them as it's HSBC that determines the terms of the card and which MCCs they are going to treat as cashlike. My AmEx card doesn't have a cash like transaction clause and so I would be able to buy the same subscription without the risk of a fee (assuming they take AmEx.

Its more nuanced that just not paying financial institutions, many people pay for their insurance by credit card and no one treats home insurance as a cash like transaction. 

Ulrich said:

They charged me 2.99% for making a "cash-related payment" using credit card.

Am I the only one that think it's crazy to treat such payment as cash-related? I don't get any of the money back, it's like a Netflix subscription.

And shouldn't Freetrade warn their customers trying to pay with a credit card that they may incur additional charges from a bank?
Yes, they have a FAQ article about that but who reads FAQ articles if it's just a payment and it normally doesn't matter if you use debit or credit card unless it explicitly says something like "you'll be charged XXX if pay with a credit card" at a payment page?

FreeTrade is an investment company as such buying investments with a credit card would be considered cash like transaction. They have chosen not to try and get a second MCC for their subscription services (or have and been told it will have the same MCC) which would enable card issuers to differentiate between investments and purchases of other services. 

There are thousands of card issuers in the world, many offer multiple different products with different T&Cs. It would be exceptionally difficult for any website to know how every single card issuer is going to treat their transactions and present various different warnings. With some card issuers their BIN are not very precise and so all the website will know is its a debit or credit card from X bank in Y country using Visa/Mastercard/AmEx network so wouldn't have the grain of detail to know if its their Gold card that has a 0.25% fee on all transactions or their Black card that is fee free. 

Do I get it right that TLDR is nobody but a customer is at fault for paying with a credit card?
Honestly, don't see a need for any website to differentiate between different types of products - it should display a warning IF it's a credit card, simples.

But then some debit cards charge fees, do they need a warning just for every single payment just in case? In which case doesn't it become pointless again because no one will read it or do anything with it just like the FAQs they already have but weren't read?