Doesnt matter, uk law from 1st December is a max charge of 0.3% by the card machine companies.
Pay the advertised price?
- Thread starter TheCrow
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Doesnt matter, uk law from 1st December is a max charge of 0.3% by the card machine companies.
Does that include ending monthly subscriptions?
I also assume they will no longer be able to charge 2.4% +10p per transaction?
If it doesnt block those ways were unlikely to see a difference.
No, it isn't. Sorry, but it simply isn't.
Until recently (earlier this year) debit card charges to card processors were a flat-rate 8p. Card processors added their charge, the MSC (Merchant Service Charge), which varied according the contract with the merchant, and generally, was higher for small merchants, would add typically 14p to 22p to that 8p, and more in some cases, and that is what retailers would pay, per transaction, to process a consumer's debit card.
Some people use debit (and credit) cards for silly amounts. I saw one idiot paying for a single chocolate bar, at under 60p, with a card. And that processing fee will have been considerably higher than the profit margin on the choc bar.
Since March, VISA now charge 0.2% (0.3% for credit cards) +1p, capped at 50p per transaction for debit cards, as per changing EU rules. However, that's the transaction processor costs, not the retailers.
The result of putting this on a percentage rather than flat rate is that costs vary with transaction value. The rate is set where card processors fees with be lower than that flat 8p for transactions under £35, but higher for values over £35. And then, there's the MSC on top.
So, every retailer faces a cost per transaction for paying by debit card. And this is for non-premium card using 'secure' (I.e. chip and PIN or contactless) methods. Other payment types incur additional charges.
So if retailers are seeking to cover their costs, they really have to consider ATV (Average Transaction Value) to determine their overall transaction charges and set a charge designed to cover annual charges by dividing them by total number of transactions. This can only ever be an estimate. Or, have P.o.S software written to charge each customer the actual transaction cost according to transaction, which would mean the consumer isn't going to know exactly what goods will cost until the till rings it up. That's hardly satisfactory.
The simple fact is that retailers pay to process cards. How much they pay varies according to contract with very different MSC's, but that 8p is the card processor fee not the merchant fee, which varies merchant to merchant, and even according to card type.
The obvious solution is to pay cash.
Which, if he made 10% on the transaction, he would probably prefer to making 15p profit on the goods, and then paying maybe 30p to process the transaction.
Not selling the goods at all is preferable to making a loss doing it.
You seem knowledgeable Aldav. Doesn't the recent changes which means that there is only 0.1% difference between credit cards and debit cards means that both should be charged the same or the cost included in the items you are buying?
And cash isn't free for a retailer to handle either. I know our bank charges between 1 and 1.5% for cash paid in so in theory now, depending on MSC, it could be cheaper for the retailer to accept payment by card over cash anyway?
Or it basically means that there will be very little in costs between cash, debit and credit card charges so either all items should have no additional charges added to them or there should be approx the same surcharge no matter how you are paying?
And cash isn't free for a retailer to handle either. I know our bank charges between 1 and 1.5% for cash paid in so in theory now, depending on MSC, it could be cheaper for the retailer to accept payment by card over cash anyway?
Or it basically means that there will be very little in costs between cash, debit and credit card charges so either all items should have no additional charges added to them or there should be approx the same surcharge no matter how you are paying?
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Cash isn't free, but it's not a 'per transaction' charge, either. It's a general overhead, a bit like electricity. Any business has to base their overall margins on cost of goods, plus enough for overheads, and profit of course.
As for the charge, yes but that's the payment processor's costs, not the retailer's merchant charges.
so why is cash a general overhead and card charges not? You are been charged 1 to 1.5% for every amount of cash you take as payment and a similar (or less amount) if the customer pays by card? Why should one be viewed as a overhead?
Perhaps in the old days but cash is dying and card/electronic payment is taking over. Would be more valid nowadays to view card charges as overheads and charge people for paying by cash?
What merchants do with cash varies. For instance, ever noticed how keen supermarkets are to offer 'cashback'.so why is cash a general overhead and card charges not? You are been charged 1 to 1.5% for every amount of cash you take as payment and a similar (or less amount) if the customer pays by card? Why should one be viewed as a overhead?
Perhaps in the old days but cash is dying and card/electronic payment is taking over. Would be more valid nowadays to view card charges as overheads and charge people for paying by cash?
But there are other risks to cash handling, too. For instance, detecting forged notes, or getting the cost of seized forgeries.
Primarily, though, because the card cost is incurred directly because of, and at the time of, the transaction. But suppose you're a small business, like a plumber, or corner shop, or restaurant, or .... whatever. One way of using cash by such businesses will be to pay their suppliers in cash, and very possibly, get lower prices by doing it. That's not my business sector, and I avoid cash handling almost entirely as clients are invoiced monthly, but I do buy some supplies in person and everybody from my local cash and carry to the garage servicing our cars like cash, in no small part because they avoid paying 3 or 4% to the banks too. We pay window cleaners, gardeners, plumbers, caterers, garage bills, etc, in cash a fair bit of the time to keep our costs down. It avoids us paying extra to those suppliers because they incur extra costs from their bank.
Also, if you have a cash balance, what do you do with it? You may even choose to bank cash in a different account, with lower cash charges, but you can't do that with card charges
because they're incurred directly as part of the transaction, at the time of the transaction.
Before cynics say it, yes, there may be other reasons why some small businesses prefer cash. And that's not my problem. I'm neither their tax collector (VAT aside, of course) nor their conscience. I don't cheat the taxman, and several tax audits over the years have only every located trivial coding mistakes, mostly involving me getting a rebate. Messing about with tax is, as far as I'm concerned, utterly unnecessary. I do okay as it is, without risking problems with the taxman. But tax fraud aside, there are legit reasons for dealing with some suppliers in cash.
The card fees, however, are are a direct transaction cost, incurred directly by the transaction, and no amount of accounting classification chanfes how the costs were incurred.
Soldato
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Those % charges are not the only hassle of PDQs. Depending on the amount of merchant accounts you own, there can be an insane amount of paperwork. The company I work for is at a point where we fill out a ton of documents per merchant account per month (this is sort of like a self audit thing). If we owned any more MID we would have an auditor come and do this stuff for us but the extra charges involved would make many of our transactions unprofitable.
For OP questions, they are not required to do that by your example, as the advertised price can be bought via cash. They are not required to take any method you would prefer to pay with, they are just required to sell at the advertised price. Any additional charges are not for the item but a service charge for using the service.
For OP questions, they are not required to do that by your example, as the advertised price can be bought via cash. They are not required to take any method you would prefer to pay with, they are just required to sell at the advertised price. Any additional charges are not for the item but a service charge for using the service.