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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ajobbins

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#1829016 25-Jul-2017 12:10

sbiddle:

It seems to depend on the card. Our office debit card (Westpac) needs the credit button.

If I understand correctly, it depends how the issuer has set up the card. Effectively it's two cards in one - using the EFTPOS network if you select CHQ or SAV, and using the V/MC networks if you press credit or use contactless.

Pretty much the same setup as you can have with many banks where you can have a current account linked to the CHQ and/or SAV buttons but CR(D) and contactless are linked to your credit account.

It may not work with contactless or credit if the merchant is EFTPOS only (does not accept credit cards)

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jimbob79

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#1829019 25-Jul-2017 12:16

When I lived in the UK I had debit card (Metro/Switch) and Credit Cards and I never paid for fees for using or owning a credit card??? So I confused as to why fees are being abolished and I don't ever remember paying a surcharge on purchases except when booking a holiday at a travel agency.

KiwiSurfer

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#1829301 25-Jul-2017 19:25

jimbob79:

When I lived in the UK I had debit card (Metro/Switch) and Credit Cards and I never paid for fees for using or owning a credit card??? So I confused as to why fees are being abolished and I don't ever remember paying a surcharge on purchases except when booking a holiday at a travel agency.

There's still interchange fees between the merchant and the banks. I have access to a fee schedule for Visa in NZ which shows they charge up to 2.9% of Visa transactions. I suspect it's these fees that's in question here.

- James

ajobbins

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#1829314 25-Jul-2017 19:38

KiwiSurfer:

jimbob79:

When I lived in the UK I had debit card (Metro/Switch) and Credit Cards and I never paid for fees for using or owning a credit card??? So I confused as to why fees are being abolished and I don't ever remember paying a surcharge on purchases except when booking a holiday at a travel agency.

There's still interchange fees between the merchant and the banks. I have access to a fee schedule for Visa in NZ which shows they charge up to 2.9% of Visa transactions. I suspect it's these fees that's in question here.

- James

EFTPOS in New Zealand is the exception when it comes to transaction fees, and is one of the key reasons why EFTPOS is and has been ubiquitous in New Zealand for a very long time. The cost to the merchant is essentially fixed, so the more volume they put through, the lower the effective cost per transaction. The fixed costs have been modest, so uptake by retailers was high, and it's almost unheard of now for any merchant to not have EFTPOS, as many people simply have no need for cash and therefore anyone without risks significant missed sales.

The reverse was true in Australia, where the EFTPOS network here does have a per transaction cost to the merchant, and as a result, there are still many places (mostly small business like Cafe's) who do not take any form of card payment. The upside however is that because both EFTPOS and Credit have always carried a transaction cost to the merchant, those with a terminal tend to accept both EFTPOS and credit without distinction. In NZ it's still not unheard of for some places to accept only EFTPOS, or place a fee on credit transactions only. The other upside in Australia, is that this existing fee structure meant the introduction of debit cards and contactless cards made little difference to merchants vs. EFTPOS, so contactless uptake is incredibly high. Almost everywhere that accepts a card, accepts contactless and debit without any hint of issue.

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old3eyes

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#1840379 7-Aug-2017 09:33

Talking of surcharges etc what is people take on this one from PB Tech.

The other week I bought a new tablet off them

Price of tablet $343.48

CC Surcharge $8.71

Shipping $5

Total $357.19

GST $53.58

Total $410.77

I would have thought that GST would only be on the tablet and not the CC Surcharge and shipping??

Regards,

Old3eyes

Behodar

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#1840385 7-Aug-2017 09:46

It's on everything. Remember that the "S" in GST is "services".

Dingbatt

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#1840415 7-Aug-2017 10:22

Behodar: It's on everything. Remember that the "S" in GST is "services".

It's even on taxes. The fuel excise we pay on petrol has GST charged on it.

“We’ve arranged a society based on science and technology, in which nobody understands anything about science technology. Carl Sagan 1996

DaveB

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#1840432 7-Aug-2017 10:40

I thought financial charges such as Bank Fees / Charges are exempt GST. That's certainly the way my accounting package is set up.

Geektastic

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#1840437 7-Aug-2017 10:47

Dingbatt:
Behodar: It's on everything. Remember that the "S" in GST is "services".

It's even on taxes. The fuel excise we pay on petrol has GST charged on it.

Since tax is neither a good nor a service, how do they explain that?!

Fred99

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#1840455 7-Aug-2017 11:03

Geektastic:

Dingbatt:
Behodar: It's on everything. Remember that the "S" in GST is "services".

It's even on taxes. The fuel excise we pay on petrol has GST charged on it.

Since tax is neither a good nor a service, how do they explain that?!

Possibly by getting the same beancounters who exempted gold, silver, and platinum ingots from GST to explain if for them.

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