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As advertised on money saving expert. I expect the big losers to be airlines and travel agents. But now presumably you could get a 0% credit card and pay for a car/ proportion of car, which the salesman will really hate!
Seems like a good thing for consumers, but I am sure things like booking fees will rise ( how else do I book something?!)
price will go up.
They can refuse to accept it.
Just Eat have introduced a Service Charge that almost exactly matches their previous card fees.
It's both a significant revenue stream and/or cost for a lot of companies - they'll all be looking to claw back the fees the card acquirers charge them from somewhere.
I bought my last car on a 0% credit card (3 of them actually), was cheaper than a loan. Salesman wasn't bothered in the slightest. They are getting paid who cares.
. They are getting paid who cares.
Merchant fees are higher for credit cards so if you pay the same price they get less, that could be 1-2% of the price. They are not making as much so they might get upset or at least skip other discounts.
Not sure, although I admit I haven't looked into it or thought about it! Merchants who were previously happy to absorb the cost & not charge a fee will carry on doing so, merchants who had a fee will just put prices up to compensate surely. The only people who'll lose out are those who are happy to use a debit card and now have to pay more.Seems like a good thing for consumers
Clearly there are advantages to the consumer in using a credit card, both in terms of protection and cash flow. It can't be a free service so why should the retailer have to pay?
New Zealand has a law that says if you charge a fee for one payment method you have to offer another, fee free, alternative.
It seems a better approach than a blanket ban on all fees that end up penalising those paying with a lower fee/fee free method of payment.
This also affects payments to HMRC, so they are no longer accepting payment by [b]personal[/b] credit card.
Worth knowing, if you have a tax bill to pay this month 🙁
Car sales will be the least affected by this
They will be on a very low charge any way
Even if they charged you a fiver to use 0% finance from a card surely you would just pay it
they will just increase their price to adjust the offset
The retailer should just charge a price for the product/service. Any charges for paying by card are operating costs that they should factor in to the price.
For example Tesco don't charge for paying on credit card. British Airways do.
It’s a con, it’s simply for airlines and other tourist/Service industries to avoid section 75 protection so they make it cheaper to pay by other means leaving the consumer less protected. Personal hate of mine.
And as for costs - not that relevant these days the majority of merchants accounts pay a percentage based fee, it used to be pence on a debit card and 2-3 percent on credit, now it tends to be 1-1.5 percent for both.
About time it came into action, should have been stopped years ago.
Credit card fees to the dealer are usually a percentage of the sale. Debit cards used to charge a flat fee per transaction but I believe thats now changed to a percentage as well.
Car sales will be the least affected by this
yep something like 85% are sold on PCP plans, so only the deposit is affected.
Last week I paid for a holiday using the credit card for extra protection and didn't incur any extra fees
It’s a con, it’s simply for airlines and other tourist/Service industries to avoid section 75 protection so they make it cheaper to pay by other means leaving the consumer less protected. Personal hate of mine.
Not really as the big airlines have other protections in place that you can claim against, it does take longer though. As a small travel operator like other package operators we bond all our client money with a third party in case we go bust. It's a significant cost on some of our offerings, to pay 1.5% or more on top from credit card payment can take a lot of margin from a product. Add in PCI compliance for online stuff and the whole business of taking a credit card becomes quite expensive.
In some low value instances it is cheaper to take credit card payment rather than a debit card as we're on a fixed rate charge.(Other operators mmv).
But those fees are also incurred on debit cards, and cheque or cash payments. Its just a cost of business. Cash costs us more than credit cards to pay in. Same for PCI, where is the difference between debit and credit?
I went to pay an £6.5k invoice for a software update on my card today (just to get the points) but they were going to charge about £130 extra for the privilege... Sod that!
I might be having an episode but I'm sure it used to be illegal to charge more (i.e. a fee) when paying via CC. The rules changed a few years ago and now they're changing back?
It should also be remembered that for many businesses, handling cash is probably the most expensive payment method.
I run a small business and we accept different payment methods (BACS, cheques, direct debit, credit cards) with significantly different attached fees. We've never got round to implementing different prices for different payment methods, but it's irritating that we now can't set our prices to reflect our costs and offer customers the opportunity to get the best possible price.
Banning fees for one payment method is the same as banning discounts for others.
What does the law actually say?
It will ban extra fees for credit cards/debit cards, but can you give a discount for your preferred payment method instead?
We've never got round to implementing different prices for different payment methods, but it's irritating that we now can't set our prices to reflect our costs
So you were never bothered enough to actually do anything about it, but know you are irritated because you can’t 🙂
Banning fees for one payment method is the same as banning discounts for others.
Possibly in your imagination it is.
But not in reality.
You can discount whatever you want, for whatever reason you want.
Offer a discount for anyone that wearing a nice hat if you like.
Or anyone that pays with sequentially serial numbered notes.
It’s totally up to you.
It’s a bit more complicated.
Surcharges/fees will be banned from being imposed on cards that fall under the IFR (Interchange Fee Regulation) which caps fees paid to the card issuer, theoretically meaning that retailers should be getting a lower transaction fee now.
The IFR doesn’t cover all cards though. Corporate cards, cards issued outside of the EU and some Amex cards (that aren’t co-branded) are exempt.
Good intentions, nightmare implementation.