Credit Cards - Fees on Gift Cards

Phil65

For the second time I have been charged a cash transaction fee on a Caffe Nero gift card.  The first time the card company and vendor blamed each other so I decided to use a different card this time - with the same result.

I called MBNA to query it - expecting them to blame Caffe Nero - but instead the representative doubled down and told me that gift cards are treated as cash transactions and incur a fee.  I told them that she was giving me false information and that this was rarely ever the case.  The did ultimately do the 'goodwill gesture' but I suspect there will be some pence to be paid as interest for a couple of months.

Anyway:
Caffe Nero clearly state no fees in their T&C but I'm pretty certain they are at fault - so beware.  However the information provided by MBNA is more worrying as to the best of my knowledge (and experience) gift cards rarely if ever should attract a fee.

TheSpectator

It's always a gamble putting a gift card on a credit card as it may be treated as a cash transaction - this will depend on the merchant code used by the retailer. 

My advice would be don't use a credit card.

MattMattMattUK

Phil65 said:

For the second time I have been charged a cash transaction fee on a Caffe Nero gift card.  The first time the card company and vendor blamed each other so I decided to use a different card this time - with the same result.

I called MBNA to query it - expecting them to blame Caffe Nero - but instead the representative doubled down and told me that gift cards are treated as cash transactions and incur a fee.  I told them that she was giving me false information and that this was rarely ever the case.  The did ultimately do the 'goodwill gesture' but I suspect there will be some pence to be paid as interest for a couple of months.

Anyway:
Caffe Nero clearly state no fees in their T&C but I'm pretty certain they are at fault - so beware.  However the information provided by MBNA is more worrying as to the best of my knowledge (and experience) gift cards rarely if ever should attract a fee.

Gift cards are treated as a cash advance by all card providers when they are told that they are gift cards, but many retailers will report under their general transaction coding rather than a code which is recorded as a cash advance/gift voucher. 

QrizB

Phil65 said:

Caffe Nero clearly state no fees in their T&C but I'm pretty certain they are at fault - so beware.

Caffe Nero do not charge a fee.

MattMattMattUK said:

Gift cards are treated as a cash advance by all card providers when they are told that they are gift cards

Exactly this. Gift card purchases are often treated as cash advances, when the card issuer is able to identify the purchase as a gift card.

MattMattMattUK said:

... but many retailers will report under their general transaction coding rather than a code which is recorded as a cash advance/gift voucher. 

OP where are you buying your gift cards? If you buy them from a general retailer along with eg. a basket of groceries, they'll potentially be recorded as groceries and you won't be charged a fee.
(My employer has a benefits scheme and when I buy gift cards through that I get a small discount and no fee.)

flaneurs_lobster

FWIW I'm using gift cards via Airtime (4% cashback) for my supermarket shops (Tesco/Waitrose/M&S) via a Santander Edge CC (2%) cashback. 

No fees, reported on my Santander app as "Purchase - Domestic".

ETA : Cafe Nero gift cards available.

WillPS

MattMattMattUK said:

Gift cards are treated as a cash advance by all card providers when they are told that they are gift cards, but many retailers will report under their general transaction coding rather than a code which is recorded as a cash advance/gift voucher. 

Not true. Barclaycard and Santander (at the very least) treat purchases of gift cards as purchases. Amex as well if you can find a gift card selling merchant who accepts them (TopGiftcards used to be one).

Tesco Bank also did last time I checked (a couple of years ago now).

LBG (including MBNA) have, by some considerable distance, the most restrictive range of MCCs they will consider a purchase.

Phil65

Thanks all for the feedback - very useful.  Looks like I will have to be more careful where I buy Gift Cards.

The Caffe Nero card was bought online from their site.  In this case I used MBNA but previously I used Tesco CC (Now operated by Barclays).  It is identified as a GC though (CS *CAFFENERO GC) so looks @MattMattMattUK is correct.  It does make it a bit hit and miss though as you don't know who is going to identify it specifically.

To my mind it's a purchase as much as anything else but I guess I'll have to adjust my standpoint.

la531983

Phil65 said:

Thanks all for the feedback - very useful.  Looks like I will have to be more careful where I buy Gift Cards.

The Caffe Nero card was bought online from their site.  In this case I used MBNA but previously I used Tesco CC (Now operated by Barclays).  It is identified as a GC though (CS *CAFFENERO GC) so looks @MattMattMattUK is correct.  It does make it a bit hit and miss though as you don't know who is going to identify it specifically.

To my mind it's a purchase as much as anything else but I guess I'll have to adjust my standpoint.

Go into Argos and buy them from there. Or anywhere else where it goes through the normal tills, such as in a supermarket.

Phil65

la531983 said:

Go into Argos and buy them from there. Or anywhere else where it goes through the normal tills, such as in a supermarket.

I need a e-card as the kids that I buy them for are not local - but I note that I can also buy them online from Argos also.  Amazon also sell them and I know they wont be flagged through them.  Just a shame that we are penalised by trying to cut out the middle man and going straight to the retailer.

Thanks again all - I've learnt something new today that will hopefully save me money (and time) later - so a good day

DullGreyGuy

Phil65 said:

Thanks all for the feedback - very useful.  Looks like I will have to be more careful where I buy Gift Cards.

The Caffe Nero card was bought online from their site.  In this case I used MBNA but previously I used Tesco CC (Now operated by Barclays).  It is identified as a GC though (CS *CAFFENERO GC) so looks MattMattMattUK is correct.  It does make it a bit hit and miss though as you don't know who is going to identify it specifically.

To my mind it's a purchase as much as anything else but I guess I'll have to adjust my standpoint.

You need to understand the concept of Merchant Category Codes... each merchant account will have a merchant ID and a MCC. The former identifies who the seller is and the later categories the type of business they are. Small merchants will have a single ID and MCC, traditionally the MCC was set by the acquiring bank but these days there is more discussion between the bank and the merchant. A big retailer however is likely to have multiple merchant IDs and each one will have its own MCC which can be the same as others or different. 

When the transaction comes to your credit card they will see the MCC and based on that can apply special rules like AmEx used to offer additional reward points if the MCC was 5411 which equates to supermarkets. A single transaction can only go via one merchant ID and therefore only have one MCC. 

Your bank will have decided with MCCs it decides are "cash like" transactions depending on the terms of your account. Many of the 9000s will be because they are generally payments to governments like 9222 is fines and 9311 is paying your taxes which clearly arent buying products or services but paying over money. 

If you go to a travel agents, if any still exist, you won't be able to pay for a holiday and buy dollars on the same transaction, the former they will put through on one account for travel agent services and the second will be via another account for FX services, the later will likely trigger cash like transaction fees. 

As you can see online the merchant ID has "GC" which suggests it's their gift card ID so their MCC will be appropriate for that. Its likely many will consider a gift card as a cash like transaction as its not either a product or a service. Now were you to go into Tesco and buy your shopping and happen to include a gift card well thats all going through as one transaction so will be 5411 MCC and so won't trigger the cash like transaction because they cannot see you spent £90 on groceries and £10 on a gift card. 

WillPS said:

MattMattMattUK said:

Gift cards are treated as a cash advance by all card providers when they are told that they are gift cards, but many retailers will report under their general transaction coding rather than a code which is recorded as a cash advance/gift voucher. 

Not true. Barclaycard and Santander (at the very least) treat purchases of gift cards as purchases. Amex as well if you can find a gift card selling merchant who accepts them (TopGiftcards used to be one).

Certainly with my AmEx card there is no concept of a "cash like transaction" in the T&Cs so other than if you withdraw cash anything else is treated as a purchase; I thought that was universal for their cards but only actually checked my cards terms. 

grumpy_codger

flaneurs_lobster said:

FWIW I'm using gift cards via Airtime (4% cashback) for my supermarket shops (Tesco/Waitrose/M&S) via a Santander Edge CC (2%) cashback. 

Do you mean 'buying gift cards'?