Tesco Credit Card - Hidden Cash Transactions

I have just queried a "Cash Transaction" on my Tesco Credit Card Statement - as I never use my Credit Card for cash transactions. It turns out the offending transaction was for some shoes from Schuh. These were ordered online and I opted to “buy now pay later” in case the goods were returned. The delay in paying was only a couple of weeks and I assumed the transaction would be treated as any normal transaction but presented to the bank in a fortnights time. I was wrong. Tesco treated this as a cash transaction and charged me a 3.99% handling charge and interest over the next two months. Tesco informed me that this was their normal practice and similar charges would be levied for the purchase of Lottery Tickets and deposits on cars (for example). Perhaps I'm being naive but deposits is a new one on me. I have just paid a deposit on a new car and am now worried that a whole load of extra charges will be appearing on my next statements. I though recent legislation outlawed the practice of charging customers for using a credit card?

Is this just Tesco or are other banks operating in a similar manner?
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Comments

  • 802083836 wrote: »
    I though recent legislation outlawed the practice of charging customers for using a credit card?

    You're confusing it with the charges for credit cards as a means of purchase. The issue you've experienced is cash fees.

    All lenders will mark certain transactions as cash. Finance, gambling, foreign currency are the usual ones.

    It's incredibly unlikely your car deposit will be classed as cash.
  • I take it this was the 'buy now pay later' service offered by Tesco, rather than the retailer.

    I had a quick look for T&Cs on this service but couldn't find anything that said it would be treated as cash by Tesco. It is possible that the retailer and/or its processing bank processed the transaction incorrectly as cash - but unlikely.

    I can't believe Tesco can have any policy for treating deposits as cash because it isn't going to know whether your transaction is a deposit or not. There did used to be an instalment payment plan available to Visa cardholders, and transactions arising would include data to say what number instalment was being processed but I doubt that service exists any more.

    Unless anyone else can find relevant T&Cs on Tesco's buy now pay later service, I'd say Tesco were out of line.

    OP, you have a Tesco credit card, do you have the T&Cs?
  • Worth querying but “buy now pay later” must be classed as finance, which for shoes seems a bit extreme.

    I’d note that although Tesco are the ones charging you the fee, it’s the way the payment was processed (in tandem with Tesco’s T&Cs) that’s caused this.

    You’d have got a notice of variation last May regarding a change in T&Cs in relation to “cash” transactions (assuming you’ve been a customer prior to that)
  • Woolco
    Woolco Posts: 172 Forumite
    The shoe retailer you mention uses KLARNA on buy now pay later. I have used serveral credit cards to pay off Klarna and never been charged. Therefore, I would ask Klarna firstly why Tesco Bank charges. Then go to Mastercard and ask them. To me, if I use a Mastercard at one place I should not be charged different.
  • Tesco charge for using your card to finance a car? Is this standard practice? I'm looking at taking out a 0% interest free card from tesco to use for a car purchase.
    Advise much appreciated :)
  • smithy_789 wrote: »
    Tesco charge for using your card to finance a car? Is this standard practice? I'm looking at taking out a 0% interest free card from tesco to use for a car purchase.
    Advise much appreciated :)

    Please double-check with the dealer that they will accept a credit card first.

    Whether any subsequent 'purchase' transaction for said car would be treated as cash would depend on whom you are paying with the card. If you are paying the dealer, it should be a purchase; if you are paying the finance company that the dealer uses that may well be treated as cash.

    @eco warrior, I sort of see what you are saying about the shoe purchase being treated as finance because Tesco will have had to pay the retailer (via Visa/MasterCard) when the transaction took place and has therefore financed the purchase for the cardholder. But, isn't that the whole point of a credit card anyway? I feel (not that my feelings make any difference when it is probably spelled out in the T&Cs) that, far from being a cash transaction, this should just have been treated as a standard purchase (albeit, deferred in debiting) and simply been subject to interest during the period of deferment with no cash transaction fee.

    If Tesco is going to treat the transaction as cash, that could also lead customers into believing that S75 protection will not be available.

    Deferring the processing of a transaction for two weeks on a credit card makes very little sense anyway, unless you can get it to slip over into the next billing period. If that isn't going to happen, why bother, because you get deferred payment through the normal operation of the credit card process anyway.
  • Woolco - it’s the credit cards terms in these instances, not MasterCard.
  • Hi Terry

    I think this charge seems a bit extreme but if a customer is settling finance or paying a deposit linked to a credit agreement I can see why that’s treated differently.

    That’s a good point re section 75, it’s something I might enquire about.
  • I think this charge seems a bit extreme but if a customer is settling finance or paying a deposit linked to a credit agreement I can see why that’s treated differently.

    I understand what you are saying but I just can't reconcile it or see it as in any way fair - not that that bothers most card companies.

    With the Buy-now-pay-later scheme (with which I'm not that familiar, to be honest) and OP's case here, Tesco is effectively saying, 'We had to finance this transaction for you. Now you must settle that finance, so that is a cash transaction'.

    How is that different to using your Tesco credit card to make a standard purchase and then paying it back by settling your credit card statement? Tesco has still had to finance the transaction for you and you've still had to pay them back.

    The only difference between the two scenarios is that 'buy-now-pay-later' gives you a bit longer before you are debited. If you're going to get hit with a cash fee and interest from day 1, there is little point in doing it - especially for 2 weeks and especially if the transaction still appears on the same credit card statement and you pay in full.

    It would be far easier (and cheaper) to simply make the purchase in the normal way and take advantage of the card's standard interest-free period or, just wait 2 weeks before making the purchase!

    To be honest, this seems like sharp practice (regardless of the T&Cs) and the facility should not be available unless it makes a material difference to the purchaser by at least pushing the debit onto a much later credit card statement.

    I wonder also if the fact that it will be treated as cash is flagged up before the customer goes through with the purchase?
  • cfw1994
    cfw1994 Posts: 1,860
    Hung up my suit! First Post Name Dropper Photogenic
    Forumite
    I had a similar odd “cash transaction fee” on my Tesco card.
    Following some twitter chat with both, I confirmed Klarna was indeed the culprit.
    Mine was a hotels.com “pay over 3 months” thing that was free from them....but was treated as a cash transaction by Tesco, it turned out.

    Daft really.

    Even though the issue was at the Tesco end, my plan is to ignore any future interaction with Klarna to avoid such daft ness.
    The amount was minuscule, but it felt like a scam!
    Plan for tomorrow, enjoy today!
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