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  • FIRST POST
    • ChrisK.....
    • By ChrisK..... 16th Apr 19, 6:58 PM
    • 535Posts
    • 217Thanks
    ChrisK.....
    I'm not sure credit card companies are wholly responsible for small retailers adding charges for peo
    • #1
    • 16th Apr 19, 6:58 PM
    I'm not sure credit card companies are wholly responsible for small retailers adding charges for peo 16th Apr 19 at 6:58 PM
    I'm not sure credit card companies are wholly responsible for small retailers adding charges for people who pay with credit card. The intention which most retailers agree to is that the credit card fees are charged to the retailer who in turn benefit from a sales they otherwise would not have made. I personally have never ever paid a retailer a premium for using a credit card because I totally object. I have always felt that this was a greedy retailer who wants their cake and eat it. They will always say that they are charged and have to pass that on, but they are not appreciating that the credit card company are lending their customer the money to make a purchase from them, without which they wouldn't have that customer at all, and ultimately I always felt that the credit card companies should withdraw from these greedy retailers.

    https://www.thisismoney.co.uk/money/news/article-6928185/14bn-damages-claim-against-Mastercard-revived-Court-Appeal-ruling.html
Page 1
    • zx81
    • By zx81 16th Apr 19, 7:20 PM
    • 21,722 Posts
    • 23,637 Thanks
    zx81
    • #2
    • 16th Apr 19, 7:20 PM
    • #2
    • 16th Apr 19, 7:20 PM
    Some sales may be incremental, but the majority are not, so the fees cannibalise existing spend if they're not covered.
    • Terry Towelling
    • By Terry Towelling 16th Apr 19, 7:45 PM
    • 1,197 Posts
    • 968 Thanks
    Terry Towelling
    • #3
    • 16th Apr 19, 7:45 PM
    • #3
    • 16th Apr 19, 7:45 PM
    Obviously the cost of doing business will always be built into any retailer's pricing structure and that will result in the price we have to pay for goods/services.

    This particular issue, however, is that one of the costs of doing business as a retailer is effectively down to something called the 'interchange fee'. That is a percentage of any credit card sale transaction and it has to be paid by the retailer's processing bank to the card issuing bank - it is not retained by MasterCard - or Visa, for that matter.

    If that interchange fee did not exist, then, yes, there is a chance that prices at the point of sale might be a tiny fraction lower but there could be far-reaching consequences that would not benefit consumers at all.

    Were it not for the interchange fee, many credit card issuers would have to make hard choices to continue in business profitably. Almost certainly, cashback cards (which pass some of the interchange fee back to consumers) would not exist.

    If there were no interchange fee, the business case for being a card issuer becomes more shaky and we could end up with fewer cards, less choice and less competition. Worse than that, we could end up with no interest-free period for full payers or see the re-introduction of annual fees, and that means we all end up paying more.

    Perhaps not an obvious point (and I am probably being a bit facetious), but most sales also have VAT added to them. So HMRC will have taken 20% of the interchange fee cost that retailers will have built into sale prices. Will HMRC pay back their gain as part of any settlement?

    This is a big deal for the cards industry and it was already rumbling away before I left the industry in 2005.
    • martinthebandit
    • By martinthebandit 16th Apr 19, 7:53 PM
    • 3,867 Posts
    • 6,671 Thanks
    martinthebandit
    • #4
    • 16th Apr 19, 7:53 PM
    • #4
    • 16th Apr 19, 7:53 PM
    ely I always felt that the credit card companies should withdraw from these greedy retailers.
    ]
    Originally posted by ChrisK.....
    One of the (many) advantages of Capitalism is that if retailers get too greedy then people either shop elsewhere and the 'greedy retailer changes his or her ways and stops being greedy or he/she goes bust.

    If you don't find joy in the snow,
    remember you'll have less joy in your life


    ...but still have the same amount of snow!
    • beany_bot
    • By beany_bot 17th Apr 19, 8:18 AM
    • 352 Posts
    • 145 Thanks
    beany_bot
    • #5
    • 17th Apr 19, 8:18 AM
    • #5
    • 17th Apr 19, 8:18 AM
    I am very much like the OP. I ran a very small business at one time and I had to pay mastercard fees etc and additional fees from izettle. I just absorbed these costs because I didn't want to put off customers by saying I had additional charges for using their preferred method of payment. You should make things easy for customers. Alas I begrudged any retailer telling me why the "had" to pass on the cost.
    • ChrisK.....
    • By ChrisK..... 17th Apr 19, 10:58 AM
    • 535 Posts
    • 217 Thanks
    ChrisK.....
    • #6
    • 17th Apr 19, 10:58 AM
    • #6
    • 17th Apr 19, 10:58 AM
    Quite, but we also need consumer protection and not just market forces to make retailers stay inline, and my point was that the credit card companies should have taken a lead, but it looks like it's now bitten them in the ace.

    One of the (many) advantages of Capitalism is that if retailers get too greedy then people either shop elsewhere and the 'greedy retailer changes his or her ways and stops being greedy or he/she goes bust.
    Originally posted by martinthebandit
    • pochisoldi
    • By pochisoldi 17th Apr 19, 11:20 AM
    • 166 Posts
    • 113 Thanks
    pochisoldi
    • #7
    • 17th Apr 19, 11:20 AM
    • #7
    • 17th Apr 19, 11:20 AM
    One of the (many) advantages of Capitalism is that if retailers get too greedy then people either shop elsewhere and the 'greedy retailer changes his or her ways and stops being greedy or he/she goes bust.
    Originally posted by martinthebandit
    Or all the retailers get greedy and do the same thing...

    For example the attempt a few years ago to split out the card processing cost (not liable to any VAT) at the till, so that a retailer selling an item at 120 (100+20 VAT)
    would claim that the customer paid 117 + 2.5% card processing fee 3, totalling 120. The item cost 60 including VAT.

    Supplier then submits his VAT return.
    Output VAT (from the customer) on the widget of 1/6th of 117 = 19.50
    (No VAT payable on the transaction fee)
    less input VAT (to wholesaler) of 1/6th of 60 = 10
    Retailer's VAT bill: 9.50

    If the retailer didn't work his fiddle, the calculation would be:
    Output VAT (from the customer) on the widget of 1/6th of 120 = 20
    less input VAT (to wholesaler) of 1/6th of 60 = 10
    Retailer's VAT bill: 10.

    Retailer trousers the extra money...
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