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Almost every adult in the UK might get a £300 refund from MasterCard

edited 30 November -1 at 1:00AM in Credit Cards
20 replies 3K views
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  • SnowTigerSnowTiger Forumite
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    18cc wrote: »

    The PPI gravy train comes to a halt at the end of August. Lots of claim companies will be sitting around on their hands waiting with a can of spray paint for the next departure.

    I wonder how Mastercard would fund a £14 billion payout? Perhaps by added a fraction of a percent to transactions made in markets not as highly regulated as the UK/EU? :rotfl:
  • FingerbobsFingerbobs Forumite
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    zx81 wrote: »
    Probably not.

    But ironically, as online retail grew and pricing became more granular, with card transactions attracting a fee to cover the costs, everyone shouted about how unfair that was.

    Now we've moved back to a place where everyone contributes to card fees again.
    I think it probably is fair. The charges for accepting card payments are just another business expense that has to be recovered from paying customers. If you go into a shop to buy a packet of crisps, is it fair that you have to subsidise the electricity bill for running the fridges, because you didn't buy something chilled?
  • TakmonTakmon Forumite
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    Bedsit_Bob wrote: »
    But is it fair that customers who used cash, rather than cards, should have been contributing toward these fees, and effectively subsidising the card users?

    Most people forget there is also a cost to businesses for accepting cash.

    Just look at a supermarket for example:
    They need more expensive tills that have cash drawers etc. This cash needs to be transported to the back room where counting takes place which costs man hours, they have to do extra monitoring to make sure staff don't steal the money. They have to transport it securely to the bank and bring change securely into the business. They have to pay to deposit the money into the bank.

    When you consider the amount of hours and other costs to process cash payments it will be far more expensive than the small fees they pay for card transactions.

    So if anything card payments will be subsiding people who use cash.

    In reality, as Fingerbobs pointed out, businesses have a lot of overheads and all these costs are incorporated into the price of the items they sell so it's all perfectly fair.
  • Terry_TowellingTerry_Towelling Forumite
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    Just to ram the point home a bit further, to understand what's going on here you have to stop focusing on the fact that retailers build their costs into their pricing structures.

    The issue is the Interchange Fee that sits hidden in the overall costs. It is a fee which passes from Merchant Acquirer to Card Issuer and will undoubtedly form part of the Merchant Service Charge (MSC).

    MasterCard doesn't retain that fee and, whether MasterCard is actually responsible for it is another moot point. Member banks are largely responsible for what goes on in the MasterCard 'club' - although I have heard tell of that power being eroded in recent years - but I can't be sure if this is one of those member-controlled issues or not.

    MasterCard (and Visa - don't know why they aren't included in the action) have long since claimed that the fee is fair value for the extra trade retailers receive and that it compensates card issuers for the risk they take by taking on the debt and guaranteeing payment to the retailer. Given that guarantee and the extra business generated, shouldn't the retailer be bearing that tiny element of the costs themselves by lowering their prices?

    I accept there is a Chargeback structure by which payments may be returned to retailers but that will only happen where they are found to be in breach of 'card scheme' rules, their Merchant Agreement or appropriate consumer legislation (which should be built into their Merchant Agreement). So, as long as the retailer does everything correctly, they get their cash and any risk of the debt going 'bad' or being unpaid if the cardholder 'does a runner' sits squarely with the card issuer.

    I cannot see how anyone can build a court case that categorically shows prices have been higher simply because of this fee, that they would have been lower without it, and that the net result of all this is that competition has suffered. (but that's probably because I'm an idiot)
  • 18cc18cc Forumite
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    https://www.theguardian.com/money/2019/apr/19/so-what-are-the-chances-of-getting-300-off-mastercard

    "The likely outcome? Mastercard will be under intense pressure to make a generous settlement offer before this reaches court – potentially within the next few months. Many think that’s the most likely result now. So will I and millions of others get that £300 cheque? Put it this way, if I were offered £150-200 now but had to relinquish any future claim against Mastercard, I’d probably take the money. But I wouldn’t forgo my claim for much less. This case has legs"
  • NoodleDoodleManNoodleDoodleMan Forumite
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    According to a financial journalist on the radio yesterday, Mastercard will appeal and contest the matter down to the wire - which could be a long protracted legal process.
  • Fantastic, I have two Mastercard credit cards = 2 x up to to £300 then.
    Hang on, is that a pig I spy flying into the distance?

  • Terry_TowellingTerry_Towelling Forumite
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    Presumably only those who were adults during the date range in the court action will be entitled to a payout.

    So, anybody like to hazard a guess at why children aren't included? It has nothing to do with having held a MasterCard; it is solely down to the fact that retailers have been 'forced' to overcharge anyone who has done any shopping during the relevant time span. And what about overseas visitors who happened to buy something? - and businesses? What about dead people whose estates will have suffered due to this horrendous overcharge?

    Visa has not been roped into the action - anyone like to suggest a reason for that? They have an interchange fee too.

    There has to be an ulterior motive behind this action because it sounds ridiculous - obviously I won't say 'no' to any cash though. Presumably it will be tax-free cash and HMRC will be required to pay back the 17.5%/20% VAT they creamed off all these excessively priced sales.
  • edited 20 April 2019 at 9:02AM
    phillwphillw Forumite
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    edited 20 April 2019 at 9:02AM
    bd10 wrote: »
    @Bob:
    That's a fair point. Customers paying by cash are subsidizing card customers. No doubt and the retailer cannot have a dual-pricing policy based on the method of payment.

    Cash handling is increasingly more expensive. While some retailers may take money out of the till to pay themselves, larger shops do not. That is why the supermarkets started offering cash back, they don't want to have to bank it as it costs too much
    Ben8282 wrote: »
    I really cant agree with this legal action. Credit and charge card company's have always charged fees to retailers from the very beginning and retailers have absorbed these fees into the their pricing on the basis that accepting the card will get them more custom or prevent the customer from going elsewhere.

    My understanding of the article is that there was a limit placed on the fees by law and they exceeded the limit. The court case will revolve around that, not because people want free money.
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