Credit Card Mini Rant Time

[developer]

Because I'm a bit bored.

On renewing my insurance with Aviva I note that there's a credit card charge of 0.5% of the total transaction - what horsesh!t.

Usually those justifying c/c fees argue that it covers the processing and electronic transfer etc.

So bigger numbers must be harder to squeeze down the wire - more effort required, hence that higher charge .

Cheeky buggers .

 

[C240Sport97]

it's the fees they have to pay to the credit card company

I bet no fee if debit card

 

[geraldrobins]

it's the fees they have to pay to the credit card company

I bet no fee if debit card

Correct or that is my experience with Aviva. But you don't have to use them.

 

[developer]

it's the fees they have to pay to the credit card company

Sure thing Sean, but a £100 premium charges £5 and a £1000 premium charges £50 - wherever it comes from.


Same buttons, same operator, same process.

Can't be right.

 

[C240Sport97]

credit card fees like this is nothing unusual .. all the airlines do it, for example

 

[Chrishazle]

You're lucky it's only 0.5%! That cheeky (Porsche) indie I won't use again charged me 2 1/2% - on a 4 figure bill - as if anyone would have that much cash in their wallet or a debit card with that much available on it, especially when expecting a mid 3 figure bill!!

 

[Deleted member 65149]

You're lucky it was only 0.5%. Credit card companies typically charge merchants up to 2.5% for each transaction. This reduces with an increase in transactions, but it's still a charge that has to be paid for somehow. Most major shops just increase all their prices to cover this charge, whether you pay by cash or card, but lots of online companies don't because they know people are comparing prices and they want theirs to look as low as possible, then slap it on when you checkout.

 

[bob6600]

Debit Card charges are normally pence, hence most companies absorb them.

large companies like Aviva will have preferential rates on CC too so 0.5% is very good (normally circa 1.5% iirc). The thing is supermarkets for example have to swallow these costs, insurance companies do not.

It would look more attractive if they added 5p onto each premium and 'waived' the CC fee but then the debit card payers would moan!

You can't win J

 

[renault12ts]

Sure thing Sean, but a £100 premium charges £5 and a £1000 premium charges £50 - wherever it comes from.


Same buttons, same operator, same process.

Can't be right.

Isn't 0.5% on £100...50p?

 

[Deleted member 6183]

Is this really an issue?

0.5% of my last premium would be 74p

I don't understand the bigger numbers bit.

 

[davidjpowell]

having a similar issue with a Utility Company. They have really annoyed me in the past with constant cold calls. Went on for years.

Unfortunately they are the current supplier to our recently moved in office.

I'm not prepared to let them have a Direct Debit. They want 2.5% to process a debit card payment. We seem to be in stalemate at the moment.

 

[Red C220]

Get an American Express card then just watch people laugh at you when you ask if they take AMEX. It has got a bit better lately though.

Most of the time I end up paying with a debit card but I do have a Mastercard backup card for online shopping stuff.

 

[neilrr]

Isn't 0.5% on £100...50p?

Duh.

 

[GLK]

Merchant processing fees are charged as a percentage of the amount on all types of cards - debit, credit and charge ones. Percentages are different, and lower for debit cards, but never free for the merchant. For a small business, the fees could be as high as 1.8% for commercial credit cards, or 1.5% for private credit card (looking at my recently setup facility with Barclaycard via Payzone).

As other already said, 0.5% is very reasonable, and only because a large company can get best rates, i.e. as close to 0.46% charged by Visa and MasterCard, as possible.

 

[Red C220]

Merchant processing fees are charged as a percentage of the amount on all types of cards - debit, credit and charge ones. Percentages are different, and lower for debit cards, but never free for the merchant. For a small business, the fees could be as high as 1.8% for commercial credit cards, or 1.5% for private credit card (looking at my recently setup facility with Barclaycard via Payzone).

As other already said, 0.5% is very reasonable, and only because a large company can get best rates, i.e. as close to 0.46% charged by Visa and MasterCard, as possible.

Sometimes but not always, you can choose a flat percentage across the board (which we do) because we are low volume but moderate transaction value (tends to be three figure transactions most of the time).

But take someone like a newsagent or even an insurance company, there you can have the option for a percentage on credit cards (and the type of card used effects the rate) and a flat fee for debit card transactions.

The debit card transaction can be as little as 18p, but what the card processor then does is put an extra 0.1% on the credit margin to bump it a bit.

This is often passed on to the end user as is the case in the OP and encourages use of debit cards.

We use Barclaycard and we choose a flat rate as most of our customers use Business Visa or Mastercard (which are expensive to accept) our rate is 1.x% I can't remember the x bit I'd have to check our last statement.

We absorb this cost by partly building it into our prices and partly absorbing it as a part of business costs.

 

[developer]

Isn't 0.5% on £100...50p?

Well spotted - see what happens when you're having a rant .

It's the principle that's wrong.

In my world there's no logic to applying a bigger fee to a bigger transaction when all the elements of the transaction are the same, whether small or large.

 

[Deleted member 6183]

Well spotted - see what happens when you're having a rant .

It's the principle that's wrong.

In my world there's no logic to applying a bigger fee to a bigger transaction when all the elements of the transaction are the same, whether small or large.

Because that what it costs the business.

 

[GLK]

I'm new to this, to be honest - setting up a new business, and only just acquired the facility and a mobile terminal, so simply went with their standard charge plan - it's just one gadget, in £120 - £150 range, private buyers ... I too will have to absorb the charges, of course. Still, cheaper than PayPal

 

[Red C220]

I'm new to this, to be honest - setting up a new business, and only just acquired the facility and a mobile terminal, so simply went with their standard charge plan - it's just one gadget, in £120 - £150 range, private buyers ... I too will have to absorb the charges, of course. Still, cheaper than PayPal

Car dealerships will go with the flat fee for debit cards and percentage on credit cards, so £500 or £50,000 costs about £0.18 to accept when paying by debit card which is so small as a percentage that's its simply absorbed.

But paying 1.9% on a £50,000 transaction is a material expense that needs to be accounted for. It is what it is.

I use AMEX wherever I can just for the points, but if there's a charge I use a debit card.