Debit card transaction

[A and C]

Today at Barton I was charged extra for using a Debit card, they claimed that the bank charged them for transactions and they were just passing on the cost.

I am sure that someone on this forum will know the truth about the cost to the retailer of debit card transactions.

[biffo28]

'Rip off' card transaction charges targeted by Which? | Money | guardian.co.uk (http://www.guardian.co.uk/money/2011/mar/30/card-transaction-charges-super-complaint-which)

[bingofuel]

Pay by cheque, it will cost them even more!

[Lagentium]

I know at Sherburn the club has a charge for the members using credit cards and passes that charge onto the people using the credit card, which I can understand as it saves them a load of money. But debit card charges? Seems a bit harsh my friend!!

Cheers, Jim:ok:

[Ds3]

How much were you charged?

There is a charge for processing debit cards, although it is nominal in comparison to that charged for credit cards. Most banks will charge a percentage of the transaction fee for credit cards, usually around 2.5%. Where as debit cards are generally a fixed fee which can be anywhere from 10p to 50p.

So with low value transactions, debit cards can actually be more expensive, where as credit cards are far, far higher for anything over say £10. Most companies choose not to pass the cost on to their customers as, like bingofuel says, cheques are far more expensive and customers often don't have cash.

[jollyrog]

Ryanair is running an airport? :ooh:

[Treadstone1]

A and C,

Sorry to hear that you have had the misfortune to be another victim....but it doesn't suprise me one little bit, Barton or City Airport Manchester as it is known as now is an absoloute rip off from start to finish, the powers that be (Peel Holdings) will not be satisfied until there is no aviation at Barton what so ever, that way they can then apply for a change of use and earn even more money from what is now no more than a dirty little field which is not really fit for purpose.

unfortunately Barton is no longer the very proud base for General Aviation it was not so long ago.

Its no wonder aircraft are leaving Barton like homesick angels......:ugh::ugh:

[xrayalpha]

OK,

Here is some info from the sharp end, ie a flying school:

RBS Business Banking Direct: no fees for accounts in credit, no fees for paying in cheques, no fees for bank payments (ie bank transfers from students online or over telephone).

Guess who we use?

(Unfortunately, being sold to Santander because way back when the EU thought Spanish banks a safer bet than British ones! And last week Santander ended "free business banking FOREVER" for hundreds of thousands of its clients.)

Of course, one could have been with LLoydsTSB who used to charge us a tenner a month and 1% on all pay-ins.

Then we get to cards (where, of course, you can only get the money if you have a business account to pay it into. So if you were with LloydsTSB, then that is another 1% to add on...)

Most of the card companies are a bit reclusive about how they charge.

Some, like the company we are with, charge 35p a transaction for a debit card, and 3.5% for a credit card. Plus £20 a month.

Paypal publishes its charges - and make no difference for debit cards (so, is cheaper than our current provider for credit cards - but then dearer for debit cards! aaargh):

Paypal also charges £20 a month.

Then:
Processing fees per transactionPrint .
Transaction rates vary based on monthly income.

Monthly income Per transaction Monthly sales volume
Above £15,000.01 GBP 1.9% + £0.20 GBP Merchant Rate (qualification required)
£6,000.01 GBP - £15,000.00 GBP 2.4% + £0.20 GBP Merchant Rate (qualification required)
£1,500.01 GBP - £6,000.00 GBP 2.9% + £0.20 GBP Merchant Rate (qualification required)
£0.00 GBP - £1,500.00 GBP 3.4% + £0.20 GBP Standard rate

So, we don't take cards!

If people don't have the cash - ie in cash, funds in a cheque account, or funds in an account they can access with telephone/internet banking, then they can't have lessons with us. That's it. But it keeps our costs down.

Our gift voucher people take web payments, so have to take cards.

For one type of flight, they offer a £2 discount if people pay with debit card. I understand few do. (they would be better off paying for £100 with a DC since they get £2 off and the voucher people pay £0.35p instead of c£3.50, so are also better off by £1.50)

Win, win.

We are not Ryanair. We simply just don't take part in the card charge merry-go-round rip-off - even if you want to pay a supplement.

(Oh yes, and did I mention a new entrant to the market from Scandinavia who offers a cheaper rate - but then says in its T&Cs that you cannot offer to make it cheaper for people paying cash, cheques or bank transfers!)

Sorry, we aim to keep flying as affordable as possible, and thus have as much of your hard-earned cash in our hard-working pockets.

So lean and mean.

If you haven't guessed, we also use aircraft with Rotax 912s on unleaded.

[xrayalpha]

ps. This is one time the great and good at Which have it wrong:

"While the cost to companies for processing a payment by debit card is around 20p, and no more than 2% of the transaction value for a credit card, Which? researchers found dozens of examples of companies charging far higher fees."

Let me assure you, the Paypal figures quoted above are far more typical of any small business.

Perhaps the figures from Which are more appropriate for M&S and Easyjet.

[dublinpilot]

(Oh yes, and did I mention a new entrant to the market from Scandinavia who offers a cheaper rate - but then says in its T&Cs that you cannot offer to make it cheaper for people paying cash, cheques or bank transfers!)

It's part of VISA and MASTERCARD international's conditions that you can't charge more for using a credit card, though they do allow discounts for paying in cash.

However they don't seem to take any interest whatsoever in enforcing that rule.

[stickandrudderman]

In my (not aviation related) business I charge the customer 2.5% for using a credit card, no charge for debit cards.
In reality I do actually make a very small profit over the year on my credit card charges but this is offset by the small losses I make by not charging for debit cards.
There are other implications to consider.
Some card companies charge the business more than others and a small business simply doesn't have the resources to calculate the charges on an individual basis.
When a business takes a credit card payment, it is accepting some risk as the funds into your bank account are by no means guarenteed; payments can be recinded by the customer or refused by the paying bank.
Charges are calculated on transaction value, not profit. So, if I charge a customer £100 but my material costs are £90.00 and he then pays by credit card the card company will pocket £2.50 of my £10 profit which equates to 25% of the profit margin. Not good for any business.
When a customer pays by credit card, he is in fact paying for insurance on the purchase as all credit card transactions are protected by law in this respect and it's reasonable to expect that insurance to come at a small cost.

[A and C]

According to the Witch report above debit card transactions should attract a charge of 20p or no more than 2% of the transaction value, as this was IRO £15 the charge should have been 0.3p so whit a charge of 50p that represents 49.7p Proffit on the transaction plus whatever they made on the goods.

If the numbers I have been presented with are true Barton is indeed a total rip off.

Would the Barton a managment like to comment ?

Any comments as to if the OFT of trading standards would be interested in this ?

[Duckeggblue]

Pay by cheque, it will cost them even more!

I am intrigued - why would you want to " cost airfields even more"? Most are struggling big time at the moment & many smaller places haven't increased their £10.00 landing fees for basic SEP in over 10 years -despite the VAT increase. If paying by debit card costs airfields an extra 50p then which is more fair - to charge the card user the 50p or to put the fees up to everybody to so that the majority of cash payers subsidise the card payer?

[Ds3]

Lets take a step back for a second here.

Firstly, my personal view is in keeping with stikandrudderman's. I look after all incoming funds for a (non-aviation) company with a business to business turnover of around £70m a year. I charge 2.5% for credit card payments, and nothing for debit cards. The slight loss on debit cards is off set by a very slight gain on credit cards.

Secondly, I think you need to revisit your calculations. 2% of £15 is 30p. Not 0.3p. As stated above, it can cost anywhere between 10p and 50p to take a debit card payment dependant on your banking facilities, and that's not taking in to account the monthly fees. So no, they aren't making a massive profit on the charges, nor are they a total rip off. But furthermore, OFT? For the sake of 20p? Is that really the best use of your time? If you don't like it, don't go there...

For the record, I have no association with Barton whatsoever. I also don't support the charging of fees for debit card payments. But I do understand why others may feel the need to pass proportionate charges on to their customer, depedant on what payment method the customer choses to use - the choice is yours, carry cash and you won't be charged. If you don't like it, blame the banks, not the companies who are being hit by extortionate bank charges when times are already hard enough...

[jxk]

Logic should tell us that we have to pay indirectly for the convenience of using a credit or debit card. Who wants to keep running to a bank to draw cash or maybe searching under the mattress.

[A and C]

As you say my calculation was a bit astray my only excuse is that it was the end of an eighteen hour day that involved 500 miles driving.

To return to the subject what I object to the most is not being told the truth about the cost of the goods or services that I am buying, I understand that the cost of providing a service has to cover the transaction and a Proffit for the providor but I would far rather they be up front about their charges.

As it happend I would not Normaly have purchased the product from Barton as I can get it at a better basic price from other providers and I know how much it costs, I needed the item and they supplied it making a healthy retail Proffit................. And then they make another lump for using plastic.

As you say the answer is to take 100% of my business to other places.

[Ds3]

In a way, they are being more truthful about the costs of the goods, and then the cost of the payment method you chose to use. However, people don't like to see this transparency as they feel like they are being overcharged.

Many other suppliers will have a slightly higher goods price to average out the varying costs of the payment methods their customers chose to make, and then don't pass the charges on. You may find that if you pay in cash you get it cheaper at those places that are transparent with their charges, where as if you want to pay by a more expensive payment method then it will be cheaper elsewhere.

But yes, the simple answer is to look at the total price of the product and then buy it from the cheapest place. Capitalism at it's finest!

@ jxk - I don't actually agree with charging for the use of the debit card. Aside from processing the transaction which is done automatically, there is no associated cost for the bank. At least no more so than withdrawing money from an ATM, paying over the bank counter, or sending payment via internet banking, all of which are charge free. In fact, one could almost argue that it's cheaper and more convenient for them.

I do, however, fully accept the charges for credit cards. Not only should people be discouraged from using them and falling in to the debt ridden mess this country already is (just ask my wife :ugh:), but there is also the question of fraud insurance etc that you get with credit cards which has an associated cost too.

[dublinpilot]

A&C

Can you say how much you were charged for using the debit card, and how it was calculated? ie a fixed amount or a certain percentage of the transaction.

[znww5]

For comparison's sake, I do a few days at a local flying club and they prefer payment by debit card. The reason is that it's quick and easy, there's a paper trail, an instant receipt and students aren't expected to wander around with wads of cash.

If you are looking at payment methods from a business point of view, it is important to note that cash transactions also carry a processing cost. Cash is easily stolen, it can be forged and somebody has to be paid to physically go to a bank in order to pay it in - so cash is far from being 'cost free'.

It could be that consumer culture is different in xrayalpha's part of the world, but where I live I would expect a company to accept debit card payments, especially for the sort of money involved in flight training. There's also a consumer 'credibility factor' associated with card payment facilities being made available. Personally I would find it rather odd, inconvenient and perhaps a little suspicious if a high value service was being offered on a 'cash only' basis.

Surcharging (or perhaps supercharging would be a better word for the loco airlines) cards at the point of sale leaves the same bad taste in the mouth as those companies who quote ex VAT prices, hidden charges will always leave consumers feeling 'ripped off' and damages the seller's reputation.

[A and C]

It was a fixed fee of 50p! Not so bad if you were filling the aircraft with fuel but a bit steep on £15 worth of goods.

[BabyBear]

A and C, in principle I am with you however I would guess that the company involved simply have a charge of 50p (seems high) for use of a debit card irrespective of the value of the transaction. The fact your transaction was of 'low value' is a red herring. It would be reasonable to expect cash for low value transactions.

In a former life the cost and inconvenience of taking cards for 'pennies' resulted in me introducing a minimum card transaction value, I think this is common practice.

Never ceased to amaze how many would pay it without complaint.

BB

[dublinpilot]

I appreciate that it might seem a lot on a small transaction, but as I understand it debit cards have a fixed fee transaction amount. 50p could well be the right range if the volume is small. I mean they could well be charged in that region by the bank.

Having said that, I too never like to see additional charges added like that.

I suppose on many small items there is only a very small profit margin so a fixed fee could really be a problem there.

[jollyrog]

I'm a customer. All I want to see is the overall price, I don't really care what the elements of that are.

Whatever fees you have to consider in your overall price, other traders have to consider the same. Therefore it's core cost. I'll compare your overall price with theirs, when deciding who to buy from.

If you make the price too complicated, I'll think you're Ryanair and not bother with you at all, taking my business to someone who just quotes an overall price and doesn't give me the impression of ripping me off - even though he might be!

[Ds3]

The problem there jollyrog, is that the supplier has no way of knowing what fees are involved until they know what payment method you are using.

So you have two options, apply the fees as a surcharge once you know what payment method the customer is using. Or increase all your prices by an average of said fees, so you can hide the fees from the customer.

The first method is the more accurate one, and fairer as it doesn't penalise those customers that chose to use a more economical payment method, however the second method is generally prefered as it prevents customers feeling like they're trading with Ryanair ;)

[Duckeggblue]

....or say the service costs (£X+ 50p), but we will accept £X for cash? ;)
I am sure that somebody will have an objection to that but I can't think of one off hand.

[Phororhacos]

I also use Paypal to process card payments, and they charge me £20 pcm +3% of the transaction whether credit or debit card used. Whilst expensive it does save the occasional bounced cheque and the hassle of paying in cash at the bank.

[BabyBear]

jollyrog, many make the assumption that all business is wanted by all businesses. My intention in having a minimum card transaction value was in fact to put them off, as the type of business was not worth the effort and detracted from core business.

One's business is not necessarily valued by the supplier as highly as it is by the purchaser.

BB

[Julian]

....or say the service costs (£X+ 50p), but we will accept £X for cash?
I am sure that somebody will have an objection to that but I can't think of one off hand.

Mr Clegg will, apparently its immoral to pay cash! :}

[Duckeggblue]

Mr Clegg will, apparently its immoral to pay cash! http://images.ibsrv.net/ibsrv/res/src:www.pprune.org/get/images/smilies/badteeth.gif

:):) .... unless you're Boris

[TheOddOne]

From znww5:
For comparison's sake, I do a few days at a local flying club and they prefer payment by debit card. The reason is that it's quick and easy, there's a paper trail, an instant receipt and students aren't expected to wander around with wads of cash.

If you are looking at payment methods from a business point of view, it is important to note that cash transactions also carry a processing cost. Cash is easily stolen, it can be forged and somebody has to be paid to physically go to a bank in order to pay it in - so cash is far from being 'cost free'.

I'm with znww5 on this one. We choose not to make a separate charge for the various payment methods we accept - debit and credit cards and cash, the latter is definitely NOT as cost-effective to us as a debit card, for the reasons given; also not mentioned is the staff cost of cashing-up at the end of the day, especially if things have been mis-rung in the till or the wrong change given, plus of course storing the cash on the premises overnight. I'd do away with cash altogether if I could. We don't take cheques from non-club members, there's no guarantee with them now and they could simply not be worth the paper they're written on.

We've thought about charging for credit cards, but the reputational thing gets to me, so we just look at the charges as a part of the cost of running our Club.

What we're really keen on getting, is a card machine for the fuel pump, but no luck so far.

Cheers,
TOO

[Gertrude the Wombat]

I'd do away with cash altogether if I could.
Our local garage has, when the parts department is closed. So if you want to buy something, whether a bottle of windscreen wash or a whole car, on a Saturday afternoon it's cards only. The legality of which I choose not to question.

[stickandrudderman]

Businesses are not legally obliged to accept any particular form of payment as they choose.

[late-joiner]

True, in that a business might decline a transaction, but once a debt has been created then cash is a legal means of settlement:
Legal Tender Guidelines (http://www.royalmint.com/aboutus/policies-and-guidelines/legal-tender-guidelines)

[FANS]

Just wait until banks charge individuals for having a basic current account facility!

[Dave Gittins]

Sadly too many banks make too many charges already.

I hate that I got charged an average of £6.00 a pop for the pleasure of using my debit card in France in cash machines a couple of weeks ago. The only upside is at an excahnge rate of £1.00 = €1.277 it's a better rate than the £1.00 = €1.20 in the UK to exchange cash.

A also hate that my US HSBC card attracts additional charges like wasps to jam if I use it in anybody elses ATM.

My biggest gripe was when I got charged 50 p by an ATM in Dubai just to check a balance an a Qatari HSBC account without actually performing a transaction.

[peterh337]

I also use Paypal to process card payments, and they charge me £20 pcm +3% of the transaction whether credit or debit card used. That is a lot. You should not be paying over 2% for any CC transaction. The charges from both HBOS (a truly crappy bank though, nowadays) and HSBC are 1.5% to 2%, with the figure depending on whether it is a company issued CC or a private one.

Whilst expensive it does save the occasional bounced cheque and the hassle of paying in cash at the bank.True, but CC payments are easy enough to revoke if somebody wants to scam you. Paypal is a crooked organisation (though very useful for paying for small items on mail order) which makes life particularly easy for customers who are scammers (do a google).

The only form of "cleared funds" is cash :)

Even a bank transfer ("cleared funds" when you get it) can be reversed out later, if the money is the proceeds of fraud, etc. That's why I would not accept even a bank transfer from what is obviously a Nigerian scammer... not that any of them would do a BT anyway; they use CCs, mainly.

[xrayalpha]

PH,

Remember there are "merchant acquirer" fees and banking fees.

Paypal wraps them into one payment, as does Worldpay.

HSBC, RBS etc will split them into two.

Still adds up to 3 per cent whichever way you slice it!

(and three per cent of gross if you have a 20% margin is between sixth and a seventh of your profits!)