Surcharges on card purchases

[Narolines]

I've just had a frank and meaningful exchange of views with my local corner shop over their charging an extra 50p on any purchases made by credit or debit cards. In case I go in there again, I'd like to be sure of my ground - is it actually legal for them to do this? It's immoral and very bad for customer relations, and I won't be paying by plastic again (I didn't have any cash with me, so I was over a barrel today), but I'd just like to know as I'm sure the topic will come up again!

Thanks in advance

[Fat Boy]

Perfectly legal as long as they make you aware that they're going to charge you. The shop owner has to pay for each card transaction - it's entirely up to them if, and how, they pass that charge on to the customer (they could always charge more for everything of course but then non-card payers are subsidising people who pay by card). If you're not happy you can always shop somewhere else.

[vehelpfulguy]

Not sure if it legal or not, but I think there are two reasons why they do it.

First, when you buy something on a credit card the retailer does not get all of it, I think the card supplier (Visa, Mastercard etc) keeps 2 or 3 percent.

So if you buy something in Dixons for �100 and pay by credit card Dixons only get about �97.

Not sure this applies to debit cards.

Second reason is that banks often charge business customers so much per transaction. Every time an item goes through their bank account the get charged.

So if people kept paying for small items on debit cards then the retailer gets charged more bank chages.

Of course the third reason could be that "corner shops" like dealing in cash so they do not have to put it through their books, and hence do not have to pay tax on it.

I am sure that is not the reason though :-)

[Loosehead]

Yes they are well within there rights. Card transactions, credit cards more than debit cards, cost extra to process, blame the banks.

[mkt]

if you pay by credit card in, for example, most travel agents they charge on average 2.5% so its not only small businesses that add a fee. and to be fair the smaller corner shop type store probably wouldnt be able to accept plastic unless they charged a small fee as it would cost them too much so by offering this facility they are making it more convenient for shoppers. if they withdrew the facility thatd prob attract more complaints than the small fee does

[Ethel]

Businesses also get charged for cheques.

As long as the charge is clearly displayed before payment is offered, it is legal.

[Narolines]

Thanks all - I was well aware of why they do it, just extremely miffed to discover that they're allowed to. Cash only if I go there again, then......

[dzug]

When cards first came in, the contract between the retailer and the issuer specified that no extra charges could be added.

However, the Monopolies Commission took a dislike to this as being anti-competitive perhaps 10 or 15 years ago, since when retailers have been free to charge a fee if they wish. So what is now illegal is for the CC company to prevent the retailer charging if he wants to.....

[Fitzer]

To comment on mkt's point about the 2.5% notices in big stores, this is actually a VAT 'dodge/avoidance' in that the retailer is only liable for VAT on the value of the supplied goods which is only 97.5% of the total price as the other 2.5% is a service. Customs & Excise recently won a case overturning this so we may soon see an end to such notices.

[CheekyChops]

I would ask them about cheques - the corner shop I work in charge 35p for a card transaction, if you pay by cheque there is no charge at all. Not many customers have actually cottoned on to this yet....

[Oneeyedvic]

Couple of points:

1) It is perfectly legal in the UK, but not in America

2) A small shop will generally be charged around 3-4% on a credit card and up to 50p per debit card. They also have to pay a monthly fee to the card handling company. If the customer complains they will also take that amount straight out. They also keep hold of the money for around 5 days.

3) As mkt says, most travel agents will charge around 2-3% on transactions involving a credit card. On a recent holiday booking this was waived if I applied for a Thomas Cook credit card.

4) The 2.5% VAT dodge (Transaction fee of 2.5%) was taken through the courts by Debenhams (i Believe) and as Fitzer says, Customs won this case. Not sure about appeals etc.

5) Although there is often a fee charged by a small company for paying by credit cards, if you do pay using this method, if the goods cost over �100 you have extra rights under the Consumer Credit Act - making the credit card company jointly liable with the retailer for any problems, warranties etc. This means if the company goes out of business, or will not help you, you can go to Barclaycard etc and they will have to sort your problem out.

Also worth noting that if the goods cost �1000, so long as you put over �100 on your credit card, you can pay the balance any way you want. The credit card company are responsible for the whole amount (up to a �30000 limit). This means if the retailer charges you 3%, you only pay that on �100 not �1000 (hope that makes sense).

[punkgirlyuk]

Hi, My local shop did this to me aswell. I was very annoyed, they have a cash machine but that charges you 2pound, they have a signe saying minimum 10pound if paying by card so i made the money up rather than get cash out, when paying he added 2pound as a charge. I was very annoyed as they had a minimum transaction amount so they were stinging you two ways!!

[kags]

The company founded by the richest man in the world - Ikea - charges 70p for each credit card transaction. On that basis, 50p doesn't sound too bad!

[Gef]

Anyone heard of cash which you can get "free" from a hole in the wall?

[ruthann58]

if i was you i wouldnt use that shop again

[liquidity]

Also worth noting that if the goods cost �1000, so long as you put over �100 on your credit card, you can pay the balance any way you want. The credit card company are responsible for the whole amount (up to a �30000 limit). This means if the retailer charges you 3%, you only pay that on �100 not �1000 (hope that makes sense).

Not sure I agree with that. The CCA 1974 only covers what you paid for with the credit card, not the whole purchase amount. If, for example, �100 was paid with a credit card and �29,899 with a debit card. the CCA 1974 only covers the �100.