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

[bingofuel]

Pay by cheque, it will cost them even more!

[Lagentium]

Charges

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

[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?

[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......

[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]

Indeed a big Barton rip off !

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]

Ds3

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 ), 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]

Nowt for owt!

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]

Dublinpilot

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.