Why did anyone think it would be different?

Consumers face higher prices and new “service charges” as retailers and businesses plan to circumvent the Government’s ban on credit card fees.

From Jan 13, “rip off” fees of up to 3 per cent charged by firms and ­government bodies when people pay by credit card – ostensibly to off-set charges paid to card companies – will be ­prohibited.

But The Sunday Telegraph has learned that some retailers and other companies are planning measures to “sneak” around the rules. These include: refusing credit card payments; increasing shelf prices; introducing new “service charges” across the board.

It costs money to run a credit card system. Someone has to pay those costs. Why not the people who use credit cards?

35 comments on “Why did anyone think it would be different?

  1. @Anon, yes. To the customer (the business taking the payments) anyway, it’s roughly that. Big businesses can get discounts.

    @Tim, it also costs quite a lot of money to run a cash operation (banking, float, pilfering, change errors,tallying, end of day bookkepping, waiting for granny to count her pennies) – costs that don’t apply to, or are much reduced with, electronic payments. But there are never service charges for cash, for some reason. (Actually, I’d love to see a “taxi meter” at supermarket tills for the penny-counters.)

    Bank transfer is the cheapest option but, while a routine payment method on the continent, Brits are scared of that.

  2. “Actually, I’d love to see a “taxi meter” at supermarket tills for the penny-counters”

    Yeah cos treating your customers like shite is a sure path to business success Biggie.

    Hey why not dig out the old scuttles and jacks and have a load of nasty twats in black uniforms police the queues while bellowing “Raus, Raus”. Those fucking Untermenschen old bags. How dare they spoil public order by getting old fashioned and feeble and counting penniez int za kashless society auf tomorrow. Los, Los old scum!!

  3. One could assume politicians are completely blind to second order effects. But it’s far more likely they just don’t give a toss, knowing the idiot meeja will instead latch onto this as an entirely new and unlinked evil that requires yet more political meddling. Trebles all round!

  4. “Actually, I’d love to see a “taxi meter” at supermarket tills for the penny-counters”

    At checkouts, it’s not cash-payers that bother me, but those women who seem to regard having to pay as an afterthought. They bag their shopping and then begin extensive excavations in a large handbag to find their purse, then drop something that has to be retrieved, then can’t locate their loyalty card in their purse, all while chatting inanely to the waiting cashier….Is it too much expect people to get prepared to pay while queuing?

  5. Quite, Lord High Ecksecutioner. The more of these scum that we get up against the wall or swinging from lampposts the better.

    Along with both you and Theo I will add the people who don’t bag their groceries but just wait there, those who are friends with the cashier, and cashiers who close the desk just after the person in front of you.

    And also people who don’t get price tags for their fruit and veg and decide they want cash back. They’ll none of them be missed!

  6. Pensioners who do their weekly shop on the weekend,
    Single mothers blocking aisles with sprogs they do not tend,
    Trolley-pushers pushing in when you’ve just half a bag,
    Lines that stop for ages when an item’s lost its tag,
    They all are on my list!

  7. The Ts&Cs of the credit card operators used to forbid charging extra for the use of their cards, which fell foul of competition(?) law. But I wonder what are the real costs of dealing with cash rather than electronic payment. No-one ever robbed a van to steal credit card vouchers.

  8. “But there are never service charges for cash”

    Bollocks. Try paying your utility bills in cash and see how much they charge you then.

  9. Hmmm.

    Firstly, customers do pay for the convenience of using a credit card in interest rates and card fees. So that’s the customer’s costs taken care of.

    if businesses want to attract customers by providing a certain service or feature – pleasant staff, air conditioning, itemised bills, helpful signage, generous returns policy, or the ability to pay by credit card – they should add the costs to their overheads and increase prices accordingly.

    What is as backward as hell is thinking the credit card system only benefits the customer, not the business (not sure Amazon would do so well as a cash-only business) and separating out the fees associated with it. This is what they do in Australia, and it is shite in the extreme. Firstly, you get some dumb bint peering at a debit card she doesn’t recognise and saying “I’d better put it in as a credit card just in case”. Secondly, nobody minds paying a quid for using a credit card, but when someone is charging 2-3% on a $1200 hotel bill for paying by card, they’re taking the piss.

  10. Whatever the cost of an electronic transactions is, I’m pretty sure it’s not related to the amount. £50 in Tesco, £500 in PC World, £5,000 in a car showroom – makes no difference to the costs of processing that transaction. It’s the same card swipe pin number device, the same bit of paper as a receipt, and the same brief electronic contact with the bank. That means that any charges should not be a percentage. The costs are flat so the charge should be, too.

  11. Bit of a role reversal here! BiG doing a turn as W S Gilbert and Ecksie bursting into fluent German.

    That 3% is known as interchange and goes on various things other than processing: payments to visa/mastercard, cashback to the cardholder, contributions to affiliated parties like football clubs and so on. The processing costs are carried by the issuer who makes his money from the cardholders who are not the small percentage who pay in full at each cycle.

  12. some retailers and other companies are planning measures to “sneak” around the rules. These include: refusing credit card payments

    How the fuck is refusing to offer a service which has now become 3% more expensive for them “sneaking around the rules”?

  13. Jim,

    Bollocks. Try paying your utility bills in cash and see how much they charge you then.

    Really? I’d have thought that cash being legal tender and utility bills being debts, that they wouldn’t be able to charge you extra for a cash payment.

  14. 3% seems like a lot.

    Is it that credit card clearing is a monopoly, or that this 3% (only for those who can’t pay by debit card) is not included in the APR?

  15. 3% seems like a lot.

    Yes, especially given that I don’t see how 3% of £3 or 3% of £3,000 is indicative of the cost of providing this service.

  16. I’d have thought that cash being legal tender and utility bills being debts, that they wouldn’t be able to charge you extra for a cash payment.

    In France you can’t pay tax bills or fines over 300 Euros in cash. I doubt you can insist.

  17. Tim Newman said:
    “customers do pay for the convenience of using a credit card in interest rates and card fees”

    Nope. No fees (I choose the right card), no interest charges (I pay it off every month), effectively a few weeks interest-free loan each month, and cashback (or Amazon vouchers, depends on the card) on everything I spend. Doesn’t cost me a penny.

    The interest charges I thought mainly covered the cost of default, those who get charged interest largely overlapping with those who are thought at risk of not paying or needing chasing..

    I assumed it worked because even with all of that it was cheaper for the businesses than handling cash.

  18. Tim Newman said:
    “In France you can’t pay tax bills or fines over 300 Euros in cash”

    Excellent; doesn’t that mean that under Murphy’s logic, the Euro isn’t money?

  19. “Is it that credit card clearing is a monopoly”

    There are two parts to credit card clearing, transaction (effectively mastercard and visa, so almost monopoly), and clearing (done bank-to-bank). The interchange fee is on the transaction authorisation, done by visa and mastercard. Though interestingly enough it wasn’t those organisations making out like bandits on interchange. The rate was dependent on all sorts of factors – risk assessment (pin transaction cheaper than signature), and premium (gold/plutonium card etc) cards charged more on the spurious grounds that businesses would be happy to pay a bigger margin to have big-spending customers. The fees as a proportion sometimes also went up (not down as you might expect) with the transaction size as well.

    Most of the interchange fee is kept by the card-issuing bank – which sets the fees – and has an interest in getting customers. They used interchange to subsidise either low-price/free cards, or premium cards which give airmiles and such.

    The retailer also HAS to pay those fees and HAS to accept the card, so there was basically the opposite of market competition on interchange fees.

    The processing fee is the other way around – collected on the payment clearance, again dependent, could be quite low (€0.10 for example) on debit cards. What’s fascinating is that as the EU regs have capped the interchange at 0.3% (less than a third of typical pre-reg interchange) the processing fees (where there should be a competitive market) have rocketed, and it’s made no difference to the payment processing costs for businesses.

  20. Note that the retailer does get some value from the credit card that they wouldn’t get from a personal check: once they get the transaction approval back from the credit card company, the WILL GET THEIR MONEY. Absolutely.

    In the days before credit cards, many paid with personal checks. CC fees were easily offset by the guarantee of getting their money.

    Bugs the crap out of me when establishments demand ID when using a credit card. It is nothing but harassment; it serves them no purpose at all. If the transaction is approved, they will get their money. Demanding ID changes nothing.

    Slightly OT:

    I bought a rifle using a credit card. I couldn’t get it to work right, so I returned it to the dealer. He refunded my money in cash. He said that if he just credited my credit card, he would be charged the transaction fee again (!).

  21. “I’d have thought that cash being legal tender and utility bills being debts, that they wouldn’t be able to charge you extra for a cash payment.”

    They get round it by having different billing tariffs – the payment method is specified in the tariff as well as the price. So to get the cheapest tariff you have to pay by DD – there is no way of having the cheapest tariff then paying the amount due in cash.

  22. BiG: I would love a plutonium card – covered in gold, of course, to keep the alpha particles in. It would be a nice hand-warmer on cold days. I would need to get rid of it though before the spontaneous fission products built up too much, and the gamma rays started to kill the chip…

  23. Don’t forget that (in the UK at least) credit card companies are jointly liable for the provision of goods for transactions over £100. If the company: goes bust, doesn’t deliver, goods are faulty etc then the credit card provider pays. Hence why transaction fees are a percentage of the value most of it is to cover the insurance and not the processing costs. That’s also why larger (safer) companies get lower fees.

  24. Another issue is chargebacks: if you go over some very small proportion of transactions (like 0.5%) the card provider will yank your merchant account. This is very bad.

  25. Damnit, Theo! If you were behind me in the queue, you might have said ‘Hello’!

    Next time, Julia, next time…

  26. Consumers face higher prices and new “service charges” as retailers and businesses plan to circumvent the Government’s EU’s ban on credit card fees.

    Fixed – Mr Telegraph, payment of GBP 500 requested.

  27. Gamecock is wrong; for non-chip and PIN transactions, all you have to do is deny that it was you who made the transaction, and not only does the retailer not get the money, they also get hit with a fine and chargeback fees.

  28. “Gamecock is wrong; for non-chip and PIN transactions, all you have to do is deny that it was you who made the transaction, and not only does the retailer not get the money, they also get hit with a fine and chargeback fees.”

    Not in ‘Merica. Merchant gets their money; the card owner has no liability, the card issuing institution is stuck for the charge. This isn’t complicated.

    “all you have to do is deny that it was you who made the transaction,”

    Then you won’t be charged or the charge will be credited back on your bill.

    “and not only does the retailer not get the money”

    No, the merchant gets his money.

    “not only does the retailer not get the money, they also get hit with a fine and chargeback fees.”

    Bullshit.

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