shops charging you additional 3% when you use your visa card

[alan47]

while on holiday in spain I bought a couple of expensive items on my Visa Card. The persons in the shops told me there would an additional 3% on the price of the item because I was using a Visa Card. Surely this cant be right! Does anybody know, are they allowed to this? Or should I complain to my Visa company?

[Oneeyedvic]

I know it is illegal to make a surcharge in the US, but certainly not in the UK. Am not sure in Spain.

 

If you go to a lot of smaller retailers in the UK, you will find that they will also charge you up to 4% for paying by credit card. This is simply what they get charged themselves by the credit card companies.

[kempie]

UK retailers choose not to pass on Credit Card charges to consumers as a gesture of goodwill. As Oneeyedvic states, it is perfectly legal for them to impose such a charge if they wish.

[Loosehead]

It is legal in the EU to have a different price for cash and credit. In uk this is generally not the default but clearly in some other countries it is. In UK if you are paying cash you can generally negotiate a discount but it is not offerred voluntarily. I think in this case rather than discounting for cash they are quoting the cash price and surcharging for credit, there is probably no charge for a debit card though.

[Sammy Snake]

If you go to some shops in the UK (I know M&S is definitely one) they print at the bottom of the receipt that 2.5% has been added to the price to cover charges imposed by credit card companies.

You pay this charge whether paying by cash or card so you are actually being ripped off if you use cash!

[twiglet4frog]

several places such as toys r us and marks and spencer have charges for using a credit card, and thats why i dont have a credit card!!! by the time u have paid the charge, and added interest on where is the half price sale gone to??

oh, and i have never been charged an extra 2.5% at marks and spencer for paying cash like was mentioned as the goods are clearly marked at the retail price and so i only handed over the cash for that! it says that u may be charged 2.5% for using a credit card which u may find added to your credit card statement, something u obviously dont get if u hand over a crisp �20 note! so to say they add on 2.5% to your till receipt when paying cash when the goods are clearly marked the retail price is wrong, it is for the cost of using a credit card as the credit card companies may be charging the store to use credit card facilities and they feel they need to recoup that but is at the discretion of the store

[WoWo]

"there is probably no charge for a debit card though."

It's the same thing, in fact it generally costs more to process debit card transactions that credit card ones. Credit cards charge a percentage but debit cards charge a flat fee (minimum payment) and an additonal percentage.

[Oneeyedvic]

twiglett4frog - yes you have been charged 2.5% paying by cash, card (debit or credit) or cheque. This is built into the price you see on the shelf. M&S don't charge you 2.5% extra if you are paying by card.

Most high street names will not charge you extra on the price advertised - it is already built into the price. The reason that most of these retailers do have on the receipt something along the lines of "2.5% is a processing charge...." is actually a VAT issue and more information than is required here.

 

Wowo - Typically, debit card purchases only attract a flat fee - not a percentage on top.For a small business - Credit cards are usually 2-3%, debit cards are around 50p.

[twiglet4frog]

think u will find that it says on the chip and pin machines that it says that a charge of  2.5% or whatever will be added. it doesnt say this if u pay for cash. what they have as the retail price is profit taking into account expenses such as credit card companies fees, however some stores to reduce there retail price to compete dont take the credit card fees into the price and instead add them afterwards onto your credit card if u choose to pay that way, that is why it is clearly added and having worked for 1 supermarket, 1 garden centre and 1, local store i have known 2 of the 3 to work like that as then they are able to sell products cheaper than it looks and then pile it on using a credit card with only a small notice saying charges may be added

[stevie21]

Can I just ask, why oh why oh why would you get a bum deal from a shop in Spain and then complain *to your visa company* ??
It never fails to surprise me that people moan at credit card companies for their shopping habits.

[Oneeyedvic]

twiglet4frog - What you will find is that if you go to Tescos (or indeed any hihgh street name) and buy something marked on the shelves for �100.00, it will cost you �100.00, regardless of whether you pay by credit card or cash. The slip you sign for your credit card will say �100.00 and that is the contracted amount.

On the till receipt will be a statement saying something along the lines of "'2.5% of this transaction is paid to the credit card company as a handling fee...'"


The 2.5% referred to is a VAT wheeze.
Most shopping (except food, books and kid's clothing) are VATable.

So if the shop uses the 2.5% VAT wheeze, it works like this:

If the shop sells you stuff for �117.50 normally, they pay �17.50 in VAT and keep �100.

If they sell you stuff for �117.50 and use the "wheeze", they split it so that 2.5% (�2.94) goes to their card handling subsidiary, and they get the other �114.56 on which they pay �17.06 of VAT and keep �97.50.

So overall, they have �97.50 and their card handling subsidiary has �2.94 = total �100.44.

Shop gains 44p - VATman loses 44p.

It sounds like a lot of faff for 44p on �100 of pre-VAT sales. But 0.44% of lots and lots of sales = lots of extra profit.

Hope this clears up any confusion that anyone has.

[Sammy Snake]

I have a Tesco receipt in front of me and it clearly states:

"When you pay by card, 2.5% of the total cost of your shopping is paid by you to Tesco Card Services Ltd for card handling services, the remaining 97.5% will be paid to Tesco Stores Ltd.  All customers pay the same amount regardless of how they pay"

[alan47]

stevie21, what are you all about? The point I was trying to make is that retailers advertise the visa sign in their windows to attract customers. Not everyone has more cash than brains and it suits people not to carry about extreme amounts of cash when shopping.

The initial concept, I thought! was that shops got more business by advertising they took visa, but now as usual...the customer gets ripped off.

[stevie21]

I agreed with you entirely up until you got to the bit where "the customer got ripped off".

It costs shops money to accept credit/debit cards. This particular one is simply passing this cost onto you as it's sort of your fault that he/she is incurring the charge. If you pay in cash, it costs him nothing. If you pay by card, he insists that the extra 3% cost is covered by you.

"The persons in the shops told me there would an additional 3% on the price of the item because I was using a Visa Card"
So you were warned about the charge beforehand but still went ahead, flew home and *then* considered moaning about all of this to your card issuer?
"What are you all about"?

Why not just say "that's a peshe deal, I'll either go elsewhere or get some cash out and hand you a bundle of notes"
?
Why?

[JSB]

I just thought I'd mention that most retailers have to pay the Banks to deal with their cash and that charge is often in the region of 3% also.  Anyone else any comments on this?