UK to ban credit card charges next year

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Forums › Finance and wealth management › UK to ban credit card charges next year

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#1826243 20-Jul-2017 21:59

What annoys me is when people have a credit account with businesses and then use a credit card to pay that off on the 20th. That is an obscene practice that I am amazed that places will allow. IMO once you have had the businesses credit you have no right to expect them to also pay a merchant fee on the settlement of that amount.

But I also would support a cash handling fee for people that pay large purchases with cash, since that has signifigant risk to businesses compared to either eftpos or credit card transactions.

Richard rich.ms

allstarnz

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#1826263 20-Jul-2017 22:37

Geektastic:

Switch cards and Cirrus cards were certainly issued the last time I banked there and they both paid straight out of your current account. A debit card is also something that pays directly from your cheque/savings account, even if it says Visa on it. Lloyds were issuing those 15 years ago at least.

Yes, while you do pay it out of your current account, this is still via the credit card merchant? And as far as fees are concerned, it's still a debit card transaction that Visa etc will charge the retailer for? That was more my point. There is still a middleman, hence it being more significant in the UK, as debit card is the default when paying by card.

richms

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#1826285 20-Jul-2017 23:58

If the merchant isnt on blended rate, then debit cards are way cheaper. Most NZ merchants are on blended because that is what was sold to them. @sbiddle will pop up with an explnation sometime soon I expect.

Richard rich.ms

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#1826294 21-Jul-2017 02:15

The fact that credit card companies give you rewards for spending on your card. Means that the fees they charge retailers are higher than the costs involved in actually processing the transactions. So that in itself means merchant fees should be reduced. And if merchant fees were lower, then more shops will start accepting paywave.

Myself - most of my purchases are either online, over the $80 no pin required limit for Paywave, or from places that don't accept credit cards. So for me an EFTPOS card is still essential. Also for retailers I like, I will use EFTPOS. To save them money on their merchant fees. Otherwise I will use my credit card so they will take the hit on the merchant fee.

rugrat

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#1826298 21-Jul-2017 03:45

I was chatting to one retailer and they told me if someone does a paywave transaction it costs them more then if card is put in machine.

If that's the case I guess that will act as a barrier for small business's to enable it/ take up.

sbiddle

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#1826307 21-Jul-2017 07:13

Geektastic:

allstarnz:

One important thing that must be noted about how things are done in the UK. There is no such thing as 'EFTPOS', in terms of paying for a transaction directly from your cheque/savings account to the vendor. Here the credit card merchants have the consumers over a barrel, you must either pay cash or use debit/credit card to pay. This means every time you pay by card, Visa/Mastercard/Amex etc clip the ticket on the way through. And (with the incentive from CC companies), some places are now encouraged to go cashless. There was a sushi place down the road from my old work that only takes card, no cash

Now that's out the way, I'm very happy about this, but I'm sure they'll figure out some way to cover the costs. In saying that, i do feel sorry for the smaller corner shops, who previously found it uneconomical for people to pay on card due to the high fees charged.

Switch cards and Cirrus cards were certainly issued the last time I banked there and they both paid straight out of your current account. A debit card is also something that pays directly from your cheque/savings account, even if it says Visa on it. Lloyds were issuing those 15 years ago at least.

Switch was actually phased out in 2002 and rebranded as Maestro. I recall in the late 90's that you could use your Switch card just by swiping it - the concept of a PIN (like we had here with EFTPOS) was still a pipe dream.

Most banks in the UK have all moved to issuing Visa/Mastercard debit cards rather than Maestro.

Geektastic

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#1826315 21-Jul-2017 08:12

So who pays for EFTPOS on the ground that nothing in life is free?

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Rikkitic

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#1826363 21-Jul-2017 09:45

I don't know precisely what the law here is, if any, but in America the money used to say it was legal tender for all debts, public and private. Some companies there tried to refuse cash many years ago and no doubt still do, but in the past, at least, that was actually illegal. American law said American cash had to be accepted for transactions if offered. This is my understanding. I am not speaking as an authority.

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sen8or

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#1826384 21-Jul-2017 10:18

As far as I am aware, there are limits on what is defined as legal tender, for example, a retailer doesn't have to accept payment for the $100 item in 10c pieces. Article from the reserve bank summarizes -

The Bank commonly receives queries about legal tender and members

of the public often ask for advice on how to resolve payment disputes,

where they have tendered cash in some form and it has not been

accepted by a seller.

Legal tender is a tender of payment that, by law, cannot effectively be

refused in settlement of a debt denominated in the same currency.

Without the concept of legal tender, cash transactions could not always

take place with sufficient certainty to satisfy the needs of consumers

and sellers. The enactment into law of the concept also supports and

reinforces currency issue by the State, by guaranteeing its currency has

an exclusive legal status that is good to settle debts. These benefits are

largely taken for granted.

On the other hand, the practical limitations of legal tender should be

acknowledged. It is always subject to the intention of the parties, who

may contract to receive payment in other than legal tender. For larger

transactions, the courts will likely presume that the parties do not

contemplate legal tender. And where disputes arise over payment,

members of the public will rely on pragmatic solutions while the formal

rules underlying legal tender will rarely have any bearing on the outcome.

Full article

http://www.rbnz.govt.nz/-/media/ReserveBank/Files/Publications/Bulletins/2015/2015sep78-6.pdf

Geektastic

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#1826441 21-Jul-2017 11:47

mudguard:
dickytim:

To those that want people penalised for using credit cards get off your high horse, they are, they pay interest and have constant debt over their heads, I have lived with this for a long time and I don't intend to go back, but that is my choice.

I spend between $500 to $1000 per month on petrol for my job. I get reimbursed for this. But several weeks later, so I use my credit card and pay it off in full every month. Once I've got my reimbursement!!
I get annoyed by the practice, I would've thought it was financially savvy to factor this into your pricing. How many sales are lost when people get to the checkout (online mostly) and realise there is a credit card surcharge to be charged?

They should just give you a company Fuel Card. Would that not be easier?!

Geektastic

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#1826444 21-Jul-2017 11:51

sbiddle:

Geektastic:

allstarnz:

One important thing that must be noted about how things are done in the UK. There is no such thing as 'EFTPOS', in terms of paying for a transaction directly from your cheque/savings account to the vendor. Here the credit card merchants have the consumers over a barrel, you must either pay cash or use debit/credit card to pay. This means every time you pay by card, Visa/Mastercard/Amex etc clip the ticket on the way through. And (with the incentive from CC companies), some places are now encouraged to go cashless. There was a sushi place down the road from my old work that only takes card, no cash

Now that's out the way, I'm very happy about this, but I'm sure they'll figure out some way to cover the costs. In saying that, i do feel sorry for the smaller corner shops, who previously found it uneconomical for people to pay on card due to the high fees charged.

Switch cards and Cirrus cards were certainly issued the last time I banked there and they both paid straight out of your current account. A debit card is also something that pays directly from your cheque/savings account, even if it says Visa on it. Lloyds were issuing those 15 years ago at least.

Switch was actually phased out in 2002 and rebranded as Maestro. I recall in the late 90's that you could use your Switch card just by swiping it - the concept of a PIN (like we had here with EFTPOS) was still a pipe dream.

Most banks in the UK have all moved to issuing Visa/Mastercard debit cards rather than Maestro.

I would say from my experience that most people in the UK welcomed the replacement of Switch etc because it did not work very well overseas, whereas having Visa logos works 95% of the time with no problem.

Pretty much all mainstream UK cards were chip and pin by the time I moved here in 2004 or so. We were astonished that at the time Visa Debit was not universally available in NZ - and even now I get people who don't believe it counts as Cheque rather than Credit at the terminal.

MikeAqua

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#1826448 21-Jul-2017 11:54

I try and avoid paying cash at small businesses. Too easy for cash revenue to be hidden and tax obligations to be dodged.

Mike

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#1826460 21-Jul-2017 12:13

Geektastic: So who pays for EFTPOS on the ground that nothing in life is free?

Retailers pay a fixed fee per month.

The EFTPOS network itself is owned by all the banks.

KiwiSurfer

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#1826461 21-Jul-2017 12:13

Geektastic:

Pretty much all mainstream UK cards were chip and pin by the time I moved here in 2004 or so. We were astonished that at the time Visa Debit was not universally available in NZ - and even now I get people who don't believe it counts as Cheque rather than Credit at the terminal.

My understanding is that when the Cheque option is selected the transaction will be processed via the domestic EFTPOS network whereas when the Credit option is selected it'll be processed via the Visa/MasterCard/etc network. It's not technially equivalent even though from the consumer's perspective both options will eventually debit the same account. This is why some retailers have POS machines that prevent the Credit option from being used for Visa Debit cards as it costs them more to process these transactions. And this is also I believe why Paywave is not accepted as Paywave only processes transactions via Visa/MC/etc and is not avaiable to be used for EFTPOS transactions.

I suspect Visa/MasterCard's end game is the abolishment of domestic EFTPOS networks like we have here in NZ so that all card transactions go via their network so they get a % of all card transactions. Not sure if that is a great idea.

richms

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#1826477 21-Jul-2017 12:43

MikeAqua:

I try and avoid paying cash at small businesses. Too easy for cash revenue to be hidden and tax obligations to be dodged.

That is why I do it at those sorts of places.

Richard rich.ms

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