Credit Cards - Fees on Gift Cards

flaneurs_lobster

piker57 said:

I'd be grateful if you could advise which retailer you're obtaining your gift cards from via the Airtime App, as I was interested by your post, but I've not been able to obviously see where I can purchase gift cards as you're doing.

TIA

If you are having trouble with the app then it's Home/More/Want to earn more rewards?-->/Buy Gift Cards-->

Gift Cards are ordered strangely with no search, prepare to scroll..

Cards (at least the ones I've ordered via AirTime) are processed/provided by a company called Simfoni who don't seem to have a retail presence.

Gooner_AJ

I noticed a £2 Cash Transaction fee on my Credit Card this morning and contacted my issuer about it.

A couple of days ago I went via TopCashBack to the 'Gift Card Shop' to buy a Cafe Nero gift card (as per the original post). When I noticed the Cash Transaction Fee this morning, I contacted my issuer (Tesco) who told me that gift cards were treated as any loadable cash card and, if using a credit card, would incur the charge but, if using a debit card, would not.

I then queried why there was no such charge for the £100+ worth of gift cards I bought before Christmas and he went on  to say that it depends how the gift card merchant reports the transaction and that a lot of work was done in November/December to make sure the transactions were reported correctly (the implication being that had not been the case previously). I asked if it made any difference if I went through an intermediary such as PayPal and he said it shouldn't.

And, of course, Cash Transaction Fees attract interest from the day they are incurred!

I'm glad that the relatively small £2 charge alerted me to this and I didn't get hit with a bigger amount this Christmas. I can't help think that this makes Gift card less attractive.

Grumpy_chap

WillPS said:

 There's also reports of bureau de changes having separate payment terminals for some customers; M&S Bank credit card customers used to be able to use M&S bureaus and have it go through as a purchase for example.

My wife can also do that if she uses her JL CC in JL to buy foreign currency - no fee and no cash advance fee / interest.
I really think this is more of a "perk" of having the card - in the same way as some cards give points - than anything magical.  I assume a regular CC buying foreign curency at JL would suffer the transaction as a cash advance.

Phil65 said:

Nasqueron said:

Phil65 said:

Nasqueron said:

I have seen people comment they have been able to buy cards via supermarket shopping, running them all together so it treats them as a shop, not the card.

Be mindful of gift cards though, they often expire or end up with weird amounts left on them that goes to waste, if giving a gift card, you might as well give cash directly as it's more flexible 

Not always possible.  Businesses are allowed to provide trivial benefits to staff ex tax which can be gift cards but cannot be cash.

I think I got the impression from somewhere you were buying them as birthday presents, no idea why!

We always got taxed on the gift cards we were issued from work

A little OT but...

They are Easter gifts to the kids from my closed company through me - you are allowed £300 per year of such gifts providing they do not exceed £50 each - Products and gift cards are included, cash is not.

Any company can provide 'Trivial Benefit' gifts to employees subject to certain rules - specifically it cannot be payment for work but can be for a birthday or special occasion.  Providing they qualify then employees DO NOT pay income tax on their value. 

Unless your kids are employed by your Ltd Co (you don't mention their ages), this would have to be 6 x £50 gifts to you and I am surprised that the rules permit 6 gifts to the Director in quick succession.

The rules also seem to preclude "cash or cash voucher".  If a Gift Card is not a "cash voucher", what is?
Postal order is the only other in between I can think of.  Oh - perhaps stamps.

This seems to be sailing very close to the boundaries of the rules for Trivial Benefits, but that is OT as a tax matter, not a matter of credit card fees as cash advance or otherwise.
I do know that my Accountant is never agreeable to process anything as tax free under Trivial Benefits rules.
https://www.gov.uk/expenses-and-benefits-trivial-benefits

WillPS

DullGreyGuy said:

WillPS said:

DullGreyGuy said:

la531983 said:

Nasqueron said:

I have seen people comment they have been able to buy cards via supermarket shopping, running them all together so it treats them as a shop, not the card.

Be mindful of gift cards though, they often expire or end up with weird amounts left on them that goes to waste, if giving a gift card, you might as well give cash directly as it's more flexible 

Even if you went into Asda just to buy a shop gift card, the till would just process it as it would 50 cans of baked beans. Doesn't have to be "ran in" with other things.

In practice I'm sure you're right but in principle a POS could be setup to run the transaction through a merchant ID based on a logic tree but as only 1 merchantID can be used for a single transaction if there is a majority of groceries then it'll be run through on the grocery ID 

I've never seen any evidence of supermarket till MCCs being dynamic. Any tills/PDQs for that. I'm not convinced it'd be a practical solution nor why the supermarkets would want to engage in it?

I have seen evidence of separate hardware for separate MCCs - the most obvious example being the tills in supermarket petrol stations (which use a different MCC from the ones in the supermarket). There's also reports of bureau de changes having separate payment terminals for some customers; M&S Bank credit card customers used to be able to use M&S bureaus and have it go through as a purchase for example.

Hence saying in practice its likely fine, it's just in principle they could do otherwise. 

Why would they want to engage it? Why do most places that have an FX Bureau use a different MMC for that -v- groceries, clothing, travel or whatever else it is they sell? You'd have thought someone could do fairly nicely out of being able to offer FX on cards without fees by running it through their normal merchant account. Presumably there is something in it for the merchant to split them 

That doesn't really answer the question.

Cash service providers have to accept that they will use an MCC which reflects that, so when they need to not use that MCC for any reason there is an imperative for them to sort that out - otherwise their customers would almost certainly be stung for fees when they need not be (or is the case of 'own customer credit card' offers should not be).

Supermarkets have no such issue. What would the benefit to them be of dynamically changing their MCC? They are able to sell anything and there is no chance at all that their customers purchases will be treated as anything other than a purchase. Everyone's happy.

Introducing such a feature, if it's even feasible, would cost them money to implement and would inevitably cause customer service/ reputation issues when customers begin to get charged for using their card.

Slinky

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. 

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

ETA : Cafe Nero gift cards available.

I've recently bought a Tesco giftcard via Airtime rewards on my John Lewis (New Day) credit card. It's coming up as Airtime Rewards Ltd on my account. I haven't had a statement yet, there's no sign of any additional charges, but does anybody know if this will be treated as a cash advance?  I read their T&Cs, but am undecided whether it is or not. I've cleared my current balance in advance of receiving a statment, plus a bit more just in case, but I'd be grateful if anyone knows for definite.  Previously I used to use my Chase debit card to get the extra 1% cashback, but of course that's all changed now.

flaneurs_lobster

Slinky said:

I've recently bought a Tesco giftcard via Airtime rewards on my John Lewis (New Day) credit card. It's coming up as Airtime Rewards Ltd on my account. I haven't had a statement yet, there's no sign of any additional charges, but does anybody know if this will be treated as a cash advance? 

Should be fine, if the transaction had been treated as a cash advance then there would be an immediate "cash" fee of 3% (or £3 if less) shown on the account. IMHO, of course.

Phil65

Grumpy_chap said:

Unless your kids are employed by your Ltd Co (you don't mention their ages), this would have to be 6 x £50 gifts to you and I am surprised that the rules permit 6 gifts to the Director in quick succession.

The rules also seem to preclude "cash or cash voucher".  If a Gift Card is not a "cash voucher", what is?
Postal order is the only other in between I can think of.  Oh - perhaps stamps.

This seems to be sailing very close to the boundaries of the rules for Trivial Benefits, but that is OT as a tax matter, not a matter of credit card fees as cash advance or otherwise.
I do know that my Accountant is never agreeable to process anything as tax free under Trivial Benefits rules.
https://www.gov.uk/expenses-and-benefits-trivial-benefits

Satisfies all the rules on that website and my accountant has cleared it.

A gift card is most certainly NOT a cash voucher:
https://www.gov.uk/hmrc-internal-manuals/national-insurance-manual/nim02497
https://blackhawknetwork.com/uk-en/resources/using-gift-cards-as-a-non-taxable-trivial-benefit

Phil65

Thanks again for all the replies.

To my mind it seems pretty disingenuous of Credit card companies.

I assume that when a truly cash transaction is completed the provider wants 100% of the transaction and therefore (quite rightly) a fee is charged by the credit card company as a service.

To all intents and purposes a gift card issued by a company is the point at which they pay credit card fees for the transaction - and then the redemption of the card is fee free to the store.  It is effectively the point at which money enters the company through a payment via a credit card.  It sounds like the credit card company is charging a % of the transaction to the store and then an extra fee to the customer directly.

Anyway fore warned is fore armed.

lon_don

Slinky said:

I've recently bought a Tesco giftcard via Airtime rewards on my John Lewis (New Day) credit card. It's coming up as Airtime Rewards Ltd on my account. I haven't had a statement yet, there's no sign of any additional charges, but does anybody know if this will be treated as a cash advance?  I read their T&Cs, but am undecided whether it is or not. I've cleared my current balance in advance of receiving a statment, plus a bit more just in case, but I'd be grateful if anyone knows for definite.  Previously I used to use my Chase debit card to get the extra 1% cashback, but of course that's all changed now.

Last week  Barclaycard reported my Airtime R gc purchase as 

Airtime Rewards Ltd, Manchester

Retailer name:	Airtime Rewards Ltd
Business type:	Digital Media Books
Town:	Manchester
Country:	Great Britain

flaneurs_lobster

lon_don said:

Slinky said:

I've recently bought a Tesco giftcard via Airtime rewards on my John Lewis (New Day) credit card. It's coming up as Airtime Rewards Ltd on my account. I haven't had a statement yet, there's no sign of any additional charges, but does anybody know if this will be treated as a cash advance?  I read their T&Cs, but am undecided whether it is or not. I've cleared my current balance in advance of receiving a statment, plus a bit more just in case, but I'd be grateful if anyone knows for definite.  Previously I used to use my Chase debit card to get the extra 1% cashback, but of course that's all changed now.

Last week  Barclaycard reported my Airtime R gc purchase as 

Airtime Rewards Ltd, Manchester

Retailer name:	Airtime Rewards Ltd
Business type:	Digital Media Books
Town:	Manchester
Country:	Great Britain

Do Barclaycard normally show a cash advance fee immediately? If so then there not being one is a result.