Card Surcharges banned from Jan 18
Discussion
Made me chuckle. The government say it's to improve transparency.
So the card fees will be absorbed into the general margin, which will now have to increase, where you can't see how much you're being asked to pay for using a card and if you pay by a previously non-surcharged method, you will now pay anyway.
Hoorah for joined up thinking!
So the card fees will be absorbed into the general margin, which will now have to increase, where you can't see how much you're being asked to pay for using a card and if you pay by a previously non-surcharged method, you will now pay anyway.
Hoorah for joined up thinking!
janesmith1950 said:
Made me chuckle. The government say it's to improve transparency.
So the card fees will be absorbed into the general margin, which will now have to increase, where you can't see how much you're being asked to pay for using a card and if you pay by a previously non-surcharged method, you will now pay anyway.
Hoorah for joined up thinking!
So the card fees will be absorbed into the general margin, which will now have to increase, where you can't see how much you're being asked to pay for using a card and if you pay by a previously non-surcharged method, you will now pay anyway.
Hoorah for joined up thinking!
janesmith1950 said:
Made me chuckle. The government say it's to improve transparency.
So the card fees will be absorbed into the general margin, which will now have to increase, where you can't see how much you're being asked to pay for using a card and if you pay by a previously non-surcharged method, you will now pay anyway.
Hoorah for joined up thinking!
So the card fees will be absorbed into the general margin, which will now have to increase, where you can't see how much you're being asked to pay for using a card and if you pay by a previously non-surcharged method, you will now pay anyway.
Hoorah for joined up thinking!
Brilliant.
RegMolehusband said:
As a B2C business owner, we'll be putting up our price a little to fund the card fees. As a consumer, I expect to have to pay a little more across the board whatever means I use to pay.
A stupid exercise.
But it costs the government nothing and it makes them look like they are doing something useful.A stupid exercise.
I have a virtual terminal account for the odd customer who would like to pay by card, on the understanding they pay the 3% i would be charged.
Oh well will just cancel the account, doesnt really effect me.
I can see the small businesses who are charging for CC increasing prices, and the others who didnt charge increasing as well just because...
Only winner as usual HMRC
Oh well will just cancel the account, doesnt really effect me.
I can see the small businesses who are charging for CC increasing prices, and the others who didnt charge increasing as well just because...
Only winner as usual HMRC
janesmith1950 said:
Made me chuckle. The government say it's to improve transparency.
According to the BBC, it was the result of an EU Directive. If the Govt had wanted to do it itself it had plenty of time to do it.janesmith1950 said:
So the card fees will be absorbed into the general margin, which will now have to increase, where you can't see how much you're being asked to pay for using a card and if you pay by a previously non-surcharged method, you will now pay anyway.
Hoorah for joined up thinking!
Indeed, companies will simply claw it back another way. But if politcians understood business they wouldn't be politcians.Hoorah for joined up thinking!
The BBC didn't mention that the companies have to pay for the card service in the first place; it would have been easy to go away thinking that the EU had saved us all money...
RegMolehusband said:
As a B2C business owner, we'll be putting up our price a little to fund the card fees. As a consumer, I expect to have to pay a little more across the board whatever means I use to pay.
A stupid exercise.
Not really.A stupid exercise.
if it is advertised in the headline price, then I know what I'm paying.
If I look at their websites, Widgets R Us have the widget I need and it is £100, but £99 at Widgets direct, then I go to Widgets Direct, but then Widgets Direct add 5% for using card, then I probably suck it up because I can't be bothered travelling across town to the other store.
It does make things more transparent and does help the consumer - whichever way you look at it.
Charging for using cards has never made any sense to me - surely it costs more to deal with cash/cheques anyway?
Yet another good idea on paper that once you look at the practicalities, will leave consumers worse off and therefore, achieve the opposite of the original intention
The issue is primarily a concern for lower margin businesses. At risk of stating the obvious, if you are an upmarket clothes retailer, selling at three times cost, the 1-2% taking a credit card costs you in merchant fees represents perhaps 3% of your gross margin. If you are say a travel agent working on a 5-10% margin, that merchant fee will cost you perhaps 20-40% of gross margin
For those who work in low margin businesses, the difference between charging a surcharge for taking credit cards and not charging can quite literally be the difference between making a profit and a loss, even for a well run, lean company. However frustrating it understandably is for consumers, those really are the cold hard facts
One part of my firm is an auction house. We charge nil surcharge for debit cards (we get charged less than £1 per transaction, our average transaction level is very high for a credit card taking merchant at c. £500 and we figure it would cost more in admin to implement if we tried imposing a surcharge). On credit cards, we charge buyers a surcharge. Buyers also have the option of paying with cash or bank transfer.
On credit cards we are charged between a little over 1% and a little under 2%, depending on the card type - commercial/business/charge/international cards cost us near the higher end of that scale and our customer base is such that we take a higher proportion of such cards than a typical merchant
As I see it, we are giving buyers a great option to use their credit card (it's relatively rare amongst auction houses) but it carries a huge cost to us (as a percentage of our margin) and therefore, we have to pass on the cost. Taking bank transfers costs us nothing, taking cash costs us 0.25%, taking debit cards costs us typically 0.2% (based on a £500 av transaction) and as referred to above, taking credit cards costs us between 1 & 2%
So with the new rules, we will either stop taking credit cards, or up our buyers premium to everyone by 2%. There are absolutely no winners here apart from the card companies who will take more money thru credit cards, as when consumers face no financial penalty for using them, their use will surely become far more prevalent - we are assuming credit card usage will as a bare minimum double once there is no penalty for consumers to use them
The card companies must be rubbing their hands with glee as the EU is giving them a monster boost in card usage & ultimately, their profits
The issue is primarily a concern for lower margin businesses. At risk of stating the obvious, if you are an upmarket clothes retailer, selling at three times cost, the 1-2% taking a credit card costs you in merchant fees represents perhaps 3% of your gross margin. If you are say a travel agent working on a 5-10% margin, that merchant fee will cost you perhaps 20-40% of gross margin
For those who work in low margin businesses, the difference between charging a surcharge for taking credit cards and not charging can quite literally be the difference between making a profit and a loss, even for a well run, lean company. However frustrating it understandably is for consumers, those really are the cold hard facts
One part of my firm is an auction house. We charge nil surcharge for debit cards (we get charged less than £1 per transaction, our average transaction level is very high for a credit card taking merchant at c. £500 and we figure it would cost more in admin to implement if we tried imposing a surcharge). On credit cards, we charge buyers a surcharge. Buyers also have the option of paying with cash or bank transfer.
On credit cards we are charged between a little over 1% and a little under 2%, depending on the card type - commercial/business/charge/international cards cost us near the higher end of that scale and our customer base is such that we take a higher proportion of such cards than a typical merchant
As I see it, we are giving buyers a great option to use their credit card (it's relatively rare amongst auction houses) but it carries a huge cost to us (as a percentage of our margin) and therefore, we have to pass on the cost. Taking bank transfers costs us nothing, taking cash costs us 0.25%, taking debit cards costs us typically 0.2% (based on a £500 av transaction) and as referred to above, taking credit cards costs us between 1 & 2%
So with the new rules, we will either stop taking credit cards, or up our buyers premium to everyone by 2%. There are absolutely no winners here apart from the card companies who will take more money thru credit cards, as when consumers face no financial penalty for using them, their use will surely become far more prevalent - we are assuming credit card usage will as a bare minimum double once there is no penalty for consumers to use them
The card companies must be rubbing their hands with glee as the EU is giving them a monster boost in card usage & ultimately, their profits
Edited by jonby on Thursday 20th July 14:46
Well spelt out by Jonby. Most people only see it from the buyer's side. Card provider fees cost my business about 7-8% of net profit and they are only used to the benefit of the customer. So I try to pass on these fees as often as whenever I can, which doesn't always happen during a telephone sale.
jonby said:
Yet another good idea on paper that once you look at the practicalities, will leave consumers worse off and therefore, achieve the opposite of the original intention
The issue is primarily a concern for lower margin businesses. At risk of stating the obvious, if you are an upmarket clothes retailer, selling at three times cost, the 1-2% taking a credit card costs you in merchant fees represents perhaps 3% of your gross margin. If you are say a travel agent working on a 5-10% margin, that merchant fee will cost you perhaps 20-40% of gross margin
For those who work in low margin businesses, the difference between charging a surcharge for taking credit cards and not charging can quite literally be the difference between making a profit and a loss, even for a well run, lean company. However frustrating it understandably is for consumers, those really are the cold hard facts
One part of my firm is an auction house. We charge nil surcharge for debit cards (we get charged less than £1 per transaction, our average transaction level is very high for a credit card taking merchant at c. £500 and we figure it would cost more in admin to implement if we tried imposing a surcharge). On credit cards, we charge buyers a surcharge. Buyers also have the option of paying with cash or bank transfer.
On credit cards we are charged between a little over 1% and a little under 2%, depending on the card type - commercial/business/charge/international cards cost us near the higher end of that scale and our customer base is such that we take a higher proportion of such cards than a typical merchant
As I see it, we are giving buyers a great option to use their credit card (it's relatively rare amongst auction houses) but it carries a huge cost to us (as a percentage of our margin) and therefore, we have to pass on the cost. Taking bank transfers costs us nothing, taking cash costs us 0.25%, taking debit cards costs us typically 0.2% (based on a £500 av transaction) and as referred to above, taking credit cards costs us between 1 & 2%
So with the new rules, we will either stop taking credit cards, or up our buyers premium to everyone by 2%. There are absolutely no winners here apart from the card companies who will take more money thru credit cards, as when consumers face no financial penalty for using them, their use will surely become far more prevalent - we are assuming credit card usage will as a bare minimum double once there is no penalty for consumers to use them
The card companies must be rubbing their hands with glee as the EU is giving them a monster boost in card usage & ultimately, their profits
Rememeber you don't have to accept credit cards at all - I am pretty sure you can just decline to accept them.The issue is primarily a concern for lower margin businesses. At risk of stating the obvious, if you are an upmarket clothes retailer, selling at three times cost, the 1-2% taking a credit card costs you in merchant fees represents perhaps 3% of your gross margin. If you are say a travel agent working on a 5-10% margin, that merchant fee will cost you perhaps 20-40% of gross margin
For those who work in low margin businesses, the difference between charging a surcharge for taking credit cards and not charging can quite literally be the difference between making a profit and a loss, even for a well run, lean company. However frustrating it understandably is for consumers, those really are the cold hard facts
One part of my firm is an auction house. We charge nil surcharge for debit cards (we get charged less than £1 per transaction, our average transaction level is very high for a credit card taking merchant at c. £500 and we figure it would cost more in admin to implement if we tried imposing a surcharge). On credit cards, we charge buyers a surcharge. Buyers also have the option of paying with cash or bank transfer.
On credit cards we are charged between a little over 1% and a little under 2%, depending on the card type - commercial/business/charge/international cards cost us near the higher end of that scale and our customer base is such that we take a higher proportion of such cards than a typical merchant
As I see it, we are giving buyers a great option to use their credit card (it's relatively rare amongst auction houses) but it carries a huge cost to us (as a percentage of our margin) and therefore, we have to pass on the cost. Taking bank transfers costs us nothing, taking cash costs us 0.25%, taking debit cards costs us typically 0.2% (based on a £500 av transaction) and as referred to above, taking credit cards costs us between 1 & 2%
So with the new rules, we will either stop taking credit cards, or up our buyers premium to everyone by 2%. There are absolutely no winners here apart from the card companies who will take more money thru credit cards, as when consumers face no financial penalty for using them, their use will surely become far more prevalent - we are assuming credit card usage will as a bare minimum double once there is no penalty for consumers to use them
The card companies must be rubbing their hands with glee as the EU is giving them a monster boost in card usage & ultimately, their profits
Edited by jonby on Thursday 20th July 14:46
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