# Should the government prohibit Credit Card surcharges?



## Brendan Burgess (7 Aug 2007)

I think Askaboutmoney could have a very interesting debate on this which I might formulate into a formal submission.

*Minister Martin seek views on proposal to prohibit ‘credit card payment surcharges’*

  Micheal Martin T.D., Minister for Enterprise, Trade and Employment wishes to announce a public consultation prior to the commencement of Sections 48 and 49 of the Consumer Protection Act 2007. 
  In accordance with the provision of Sections 48 and 49 the Minister is seeking the prohibition of ‘credit card and other relevant methods of payment surcharges’ to consumers. 
  Section 48 of the Act prohibits traders who accept payment for goods and services by a number of different relevant payment methods from imposing additional charges on the price of goods and services solely by reason of customers choosing to make payment by one relevant payment method over another.
  Section 49 obliges traders who do impose additional charges solely by reason of customers paying for goods and services by a particular relevant method (and who by virtue of only accepting payment by that one relevant method are not subject to the prohibitions of Section 48) to ensure that such charges are included in the price of such goods and services, which must be represented as a single amount.
  Before commencing Sections 48 and 49 later this year, the Minister is seeking the views of the public, payment card holders, retailers and other interested parties on a number of issues. 
  For example the Minister is seeking views as to what additional methods of payment, other than the methods of cash, credit cards and direct debit already specified in Section 48, should be prescribed as relevant payment methods for the purposes of the legislation. 
  The Minister is also anxious to identify any issues which would require guidance arising from the commencement of Sections 48 and 49. 
  “The consultation paper detailing the various issues upon which I am inviting views is available on the Department of Enterprise, Trade and Employment website at http://www.entemp.ie/publications/commerce/2007/consultationpaper48&49Aug07.pdf or can be applied for by telephone at (01) 6312617. I have also arranged for advertisements to be placed tomorrow’s national media. I am interested in hearing the views of all interested parties and I would urge them to submit these by the 7th September deadline,” the Minister said.
  “The sole aim introducing these provisions is to protect consumers and I am confident that their impact will be in line with that aim,” the Minister concluded 
  Comments on the consultation paper should be submitted by electronic format to conspol@entemp.ie, or by post to Consumer Protection Act Consultation, Competition and Consumer Policy Section, Department of Enterprise, Trade and Employment, Earlsfort Centre, Lr. Hatch Street, Dublin2 by *Friday 7th September*.


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## Brendan Burgess (7 Aug 2007)

*Re: Public consultation on credit card surcharges*

Here is a previous discussion where a supplier puts the case very well:

http://www.askaboutmoney.com/showthread.php?t=43887

Brendan


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## CCOVICH (7 Aug 2007)

*Re: Public consultation on credit card surcharges*

As they said on Newstalk this morning, if the Government want to save people money ('protect consumers'), why not abolish the stamp duty on credit cards which affects all credit card holders?


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## Purple (7 Aug 2007)

*Re: Public consultation on credit card surcharges*

I agree with CCOVICH; why not remove the duty on cards?
As for the surcharge; it makes sense as the merchant will have to recover the cost somewhere. When the cost is presented in an open book format the consumer has the choice to accept it or use a different payment method. If the merchant cannot present the cost in this way it will be averaged out into their cost base and applied to all prices. This lack of transparency is not in the interest of the consumer. 
I suspect that the credit card companies support the idea of banning surcharges.


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## ClubMan (7 Aug 2007)

*Re: Public consultation on credit card surcharges*

Is this consultation also relevant to proposed plans to ban levies on those who *fail/refuse* to pay by card or direct debit in certain situations (e.g. like the way _NTL _recently penalised non _DD_ bill payers by charging them an extra €2.50 or something like that a month)? Seemingly there is a proposal to ban such charges but this would also have the possibly undesirable side effect of making it illegal to offer discounts to people who do choose to pay by card/_DD_. I'm not sure of the exact details (e.g. who is proposing the legislation, what state it's at and whether or not it relates to the original post here).


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## Brendan Burgess (7 Aug 2007)

*Re: Public consultation on credit card surcharges*

The consultation is about credit card surcharges, so this discussion should be about them. 

The tax on Credit Cards is relevant, but please don't take the thread off into other areas. 

Brendan


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## CCOVICH (7 Aug 2007)

*Re: Public consultation on credit card surcharges*

Prices quoted by Ryanair, Ticketmaster etc. should be all inclusive, i.e. if there are handling fees etc. that cannot be avoided (other than by choosing not to purchase the product/service from the provider in question) they should be included. 

In fact, if it can be 'proved' that the majority of certain purchases take place by using a credit card, would it make sense to have the regular price include a cc charge, with a line stating that there is a 'discount for cash purchases'.

As far as I can see, cc surcharges/handling fees etc. are a standard cost of doing business in some cases, e.g. most online bookings, so if they are banned, prices will simply rise.

No real benefit to the consumer there as far as I can see.


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## Riddler (18 Aug 2007)

*Re: Public consultation on credit card surcharges*

Brendan

Good thread. The surcharge is probably excused as an effort to cover costs of administration (which have been driven down by end to end processing) and the merchants charge on turnover which can be as high as 4%. Though I'd imagine that RyanAir et al have negotiated this down or generates quite a lot of fee income on profit share deal. I suspect the latter. 

Frankly today, unless the zipzap machine is still in use there is no reason why surcharges should apply. They are a hangover of a time where it might have been legimate but have become another way of generating fee or additional income. 

Its an exploitative tax on electronic consumer transactions. As far as the Government tax which is in fact a transaction based charge inherited from the bill of exchange stamp , it's a nonsense in a modern society promoting access to IT solutions.

It would be interesting to factor in the costs of development of these payment systems and reckon the ROI at this time. Intuitively there are super normal profits being made per transaction. 

From a consumer perspective I expect to pay for conveniece but it is quite apparent that this payment has an embedded markup.

In a wider sense the regulatory captivity or self-interest of relationships between the banking intermediaries and credit card payment system providers is quite unique in the Irish case. 

Suggest a "non-tranferable to the consumer" "tax" per transaction on the banks and others might well act as an impetus to competition. This is a case of Government and industry collusion in a system that requires the consumer to pay more than what might be seen as a reasonable price for conveniece. After all I am now no longer charged through the nose for making a mobile call...unless I roam.

The cost per credit card transaction has plummeted in the past decade and surcharges are a throw back. The relevent section should be enacted which leaves the matter of expensive cash and cheque payments to be dealt with another way. 

I also note the minister for reports has struck again.


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## Purple (18 Aug 2007)

*Re: Public consultation on credit card surcharges*



Riddler said:


> I also note the minister for reports has struck again.


 How true, they are still reading the ones from the Martin era in the Dept of Health.
Great post BTW.


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## Brendan Burgess (3 Sep 2007)

*Re: Public consultation on credit card surcharges*

I have a Head to Head with Dermot Jewell of the Consumers' Association in today's Irish Times



Brendan


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## MOB (3 Sep 2007)

*Re: Public consultation on credit card surcharges*

I found Dermot Jewell's article very poor.   I lean towards the views expresssed by Brendan, with a small caveat:   There is an issue with some vendors using the credit card surcharge as a way to generate revenue, rather than merely cover costs.   This can penalise the consumer who fails to shop around or use alternative payment methods.   Often, the consumer who fails to shop around is the poorly informed one who perhaps needs protection.  Admittedly it is also often the consumer who is just lazy, and deserves no sympathy
Can we find a way to protect the ill informed?  Can we regulate so that charges cover costs and go no further?  Is this going to be more than it is worth for the benefits delivered?


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## ClubMan (3 Sep 2007)

*Re: Public consultation on credit card surcharges*

They should have renamed the slot _Header to Header _for this week only.


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## Brendan Burgess (3 Sep 2007)

*Re: Public consultation on credit card surcharges*

Thanks


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## Purple (3 Sep 2007)

*Re: Public consultation on credit card surcharges*

A load of populist nonsense from Dermot Jewell. I expected better.


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## ClubMan (3 Sep 2007)

*Re: Public consultation on credit card surcharges*

Poor stuff alright. He seemed to pin all "blame" on the retailers/banks/_CC_ companies and ignored the fact that consumers have some responsibilities in such matters - e.g. to pay off their _CC _bills or pay interest on outstanding balances (he seemed to consider those who did/could not as some poor unfortunates rather than people who had landed themselves in debt through their own volition) and to shop around when choosing a product/service and a payment method that matches their specific requirements.


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## Riddler (4 Sep 2007)

*Re: Public consultation on credit card surcharges*

Are we missing something here. The CC market is oligopolistic with on the face of it little or nor real competition. Given the merchant providers who are also card issuers are owned by the Banks then we are dealing with a situation where the retailer and consumer are in effect captured by the power of the service providers. The argument would appear to be if there is proper competition and transparency then the consumer should beware….which appears to be a version of caveat emptor. Or that the consumer should have to foot the pass through pricing of an oligopoly. I doubt if many businesses would like to move back to the cash economy. Convenience comes at a price but at what is the true cost ? Remember that small businesses are consumers of card services too with little or no power as buyers.


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## ClubMan (4 Sep 2007)

*Re: Public consultation on credit card surcharges*

You mean as covered in this thread?


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## Sunny (4 Sep 2007)

*Re: Public consultation on credit card surcharges*

Is the credit card surcharge any different to a bank saying that cash handling charges are massive so they are going to charge a surcharge for every cash lodgement and withdrawal? 

Also the example of James Adams charging 2% for visa and 3.5% for mastercard due to different charges imposed on them by the companies. Fair enough, but I have never seen a retailer or business display a list of charges imposed on them by the credit card companies. How do customers know that James Adams is not being charged 1.5% and 3% and the extra .5% is profit. There doesn't seem to be any transparency. For example if Visa charge 2% to retailers, then why did Ryanair just charge me a 7.47% surcharge for booking a flight using a visa card.


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## z107 (4 Sep 2007)

*Re: Public consultation on credit card surcharges*



> The consultation is about credit card surcharges, so this discussion should be about them.
> 
> The tax on Credit Cards is relevant, but please don't take the thread off into other areas.


Thanks for highlighting this proposal.

I will be submitting a comment about the tax on credit cards, which is effectively a tax on ecommerce. IMHO, this is a far more important issue.



> Section 48 of the Act prohibits traders who accept payment for goods and services by a number of different relevant payment methods from imposing additional charges on the price of goods and services solely by reason of customers choosing to make payment by one relevant payment method over another.


I suspect that companies will simply always charge the higher amount.
Example, credit card processing company charges €1 for a laser card and €5 for a visa card. The retailer will just charge €5 for every transaction.


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## HorseBox (4 Sep 2007)

*Re: Public consultation on credit card surcharges*

I think Brendan's Irish Times piece was deficient in many respects, and although Jewell was sloppy, Brendan was sloppier. Many of the things Brendan said don't stand up to scrutiny, for example:

"If I pay by credit card, the business has to pay the credit card company 3 per cent of the purchase price. If I buy something from an impoverished artist for €400 with my credit card, the artist gets €388 and the credit card company gets €12"

Not true. The retailer pays its 'acquirer' (its bank) the fee, it doesn't pay the CC company. Also, the fee is not 3%. It varies. It can be zero, it can be 1%, it can be 5%. It all depends on the retailers relationship with its acquirer and the deal it has negotiated. The problem is that current rules allow for a lack of transparency. Retailer says "the charge is to cover the fee I'm charged". Customer has no way of knowing this - the retailer can easily slide in an extra margin on the surcharge, effectively charging (in an unregulated fashion) a margin on the sale of a financial product.

"If surcharges on credit card payments are banned, many businesses will simply stop accepting credit card payments. How can this be in the interests of consumers?"

Of they course they won't stop. If businesses want to be competitive, they will accept CCs. Simple as that. It is a cost of doing business. They gain advantage from it (it widens their market and appeal). They benefit, therefore it's a cost they should absorb.

"The best protection for consumers is competition, choice"

Yes, but on a level playing field. If a consumer is penalised for one method of payment over another, is that real choice?


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## Brendan Burgess (4 Sep 2007)

*Re: Public consultation on credit card surcharges*

Hi HorseBox

I think you are being a bit hard on me. 

1) I say that the company is charged 3%. I point out later that Amex charges 3.5% and Visa charges 2%. The point is that the company has an extra charge for accepting credit cards and they pass it on. 

2) low margin businesses such as travel agencies and other low cost business models will have to stop accepting credit cards if they are not allowed pass on the cost to them. 

Some companies have surcharges for using credit cards. Others have higher prices all round and don't discriminate between the different ways of paying. That is competition as it should be. It would be wrong to force all companies to have the same pricing model. 

3)





> "The best protection for consumers is competition, choice"
> 
> Yes, but on a level playing field. If a consumer is penalised for one method of payment over another, is that real choice?



Of course, it's real choice. You can choose to buy petrol at a station which accepts credit cards or one which does not accept credit cards. If one imposes a surcharge for accepting credit cards, you can take your business elsewhere.


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## Riddler (4 Sep 2007)

*Re: Public consultation on credit card surcharges*

http://www.choosingandusing.com/ Example of an industry doing the right thing by consumers. I believe this initiative was originated in the US through the use of summary boxes/schumar box. Works to standardise offerings within a easy to read format containing key information allowing for a monthly comparison. This is more like the innovative industry iniatives required of Irish financial service providers.


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## HorseBox (5 Sep 2007)

*Re: Public consultation on credit card surcharges*

Hi Brendan,

Was just being a bit of a devil's advocate. No offence intended.

I do understand the fact that consumers have responsibilities and need to put effort into their purchasing, and that is something that is often overlooked. The cliche that the consumer is always right is, of course, wrong, and extra regulation usually just clouds issues.

However, on this one issue, I think rules are needed. Not because consumers need protection from themselves or to enforce a unilateral pricing model, but to reduce the scope for some retailers to slide in extra margins on the pretence of it being a surcharge.

Transparency in this issue can only be good for consumers. If not an outright ban on surcharges, then some way needs to be found to make sure that extra margins are not being shuffled in on the cost of a credit card transaction, as a way to gouge extra revenue for the retailer. I think it is fair that this point is addressed.


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## Brendan Burgess (5 Sep 2007)

*Re: Public consultation on credit card surcharges*

Hi HorseBox

No offence taken. 

You make good points, but then lose them in language which strikes as OTT 



> then some way needs to be found to make sure that extra margins are not being shuffled in on the cost of a credit card transaction, as a way to gouge extra revenue for the retailer. I think it is fair that this point is addressed.


 
If directski.com charges me €1000 for a holiday paid by Laser Card and €1,000 + 5% for a holiday paid by Credit Card, does it matter as long as they specify the charges up front? I would prefer to pay €1,000 + a €50 CC surcharge than €1,100 to someone who does not charge a surcharge. 

The retailer should be free to set their prices. It does not have to be that they recover only their costs. Some charge less than the cost to them - some charge more. As long as it is transparent, then it's ok.


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## Sunny (5 Sep 2007)

*Re: Public consultation on credit card surcharges*



Brendan said:


> Hi HorseBox
> 
> If directski.com charges me €1000 for a holiday paid by Laser Card and €1,000 + 5% for a holiday paid by Credit Card, does it matter as long as they specify the charges up front? I would prefer to pay €1,000 + a €50 CC surcharge than €1,100 to someone who does not charge a surcharge.
> 
> The retailer should be free to set their prices. It does not have to be that they recover only their costs. Some charge less than the cost to them - some charge more. As long as it is transparent, then it's ok.


 
I wouldn't have a problem if directski advertised prices as €1050 including credit card surcharge but they don't and neither do ticketmaster, airlines etc. They still advertise the price as €1000 in their headline advertising and put the surcharge in tiny writing down the bottom or when you go and book it. Also, retailers are allowed and entitled to sell at whatever price they want. I just don't think they are entitled to blame the credit card costs if they are are also using it to increase margins on good sold. Why don't they increase their label price and make the credit card surcharge exactly the same as what they are being charged for accepting it. Its hidden charges just like the so called fuel surcharge by airlines. They are just trying to avoid raising the advertised or headline price while still charging more. How can this be good for the consumer?


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## ubiquitous (5 Sep 2007)

*Re: Public consultation on credit card surcharges*

I own my own small business and my customers comprise both consumers and businesses. When the business was formed, we opened a merchant account with a Credit Card company and for a number of years our customers could opt to pay us by credit card if they wished. We eventually withdrew this service and closed our merchant account partly because comparitively few customers ever paid by credit card but also because we found that the procedures we had implemented in order to handle credit card receipts involved a fair degree of hassle, which simply wasn't worth it.

We could have opted to charge an extra fee for handling credit card transactions but in our own case we didn't, as we felt it was worth bothering with. Based on our experience, I can understand why many businesses do implement such surcharges, if they wish to provide this option.


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## MOB (5 Sep 2007)

*Re: Public consultation on credit card surcharges*

"The retailer should be free to set their prices. It does not have to be that they recover only their costs. Some charge less than the cost to them - some charge more. As long as it is transparent, then it's ok."

It is hard to argue with the logic of this.  However, this debate is being conducted in a forum largely populated by the relatively young, relatively well educated, relatively well informed consumer.   There are many consumers out there who are not that well educated, not that well informed, and not that well off.   These are people who are easily victimised in their financial dealings.  To some extent, it is their own fault.   But to some extent, they are victims of the suppliers who take advantage of their lack of savvy.   This is part of the reason why the large grocery chains can get away with charging a little more in their shops in poorer areas.  

Of course one wants to avoid straying too much into the area of a nanny state.  But if educating\informing consumers can demonstrably be shown not to be working in certain areas, and then I think that regulation may have some part to play.


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## ClubMan (5 Sep 2007)

*Re: Public consultation on credit card surcharges*



MOB said:


> Of course one wants to avoid straying too much into the area of a nanny state.  But if educating\informing consumers can demonstrably be shown not to be working in certain areas, and then I think that regulation may have some part to play.


Watch a few episodes of _Show Me The Money_. Do you want financial industry regulatory legislation to be driven by the experiences of people like this?


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## HorseBox (5 Sep 2007)

*Re: Public consultation on credit card surcharges*



Brendan said:


> The retailer should be free to set their prices. It does not have to be that they recover only their costs. Some charge less than the cost to them - some charge more. As long as it is transparent, then it's ok.


 
If retailers recover more than the cost - i.e. they charge an extra margin on top of the cost to them of facilitating the transaction - then they should not be allowed to pass this off to the consumer as a credit card surcharge to cover costs. Retailers usually pass it off as a passed-on third-party cost, as if it were somehow out of their hands. Usually it is not. It is a passed-on third-party cost with a juicy extra margin for the retailer on top. Therefore, the customer is unwittingly buying an extra product without realising it. That, to me, is dishonest. This transparency issue needs to be addressed.

If the consumer is paying for a margin on the CC transaction too, the consumer should be made aware of this, so that s/he can make an informed choice about whether they want to purchase this unordered, unwanted product. There is an entire hidden industry out there on the "sale" of CC surcharges, which cannot be quantified because the retailer is not obliged to provide information. Is that transparency and consumer friendly?


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## Brendan Burgess (5 Sep 2007)

*Re: Public consultation on credit card surcharges*

The cost of a direct ski holiday is €1,000 and that is what the majority of customers pay.

The cost of a direct ski holiday for the minority who want to finance their holiday using the credit card is the additional €50. 

They are not under any obligation to pay by credit card. They are made aware of the charges up front. 

I agree that a company must make their customer aware as soon as possible. But they don't need to advertise the cost as €1050 in their ads. 

A company might consider noting in its ads, "Payments by CC welcome, but a surcharge applies". Although I personally hate all these ludicrous "Terms and Conditions apply", "AIB is regulated by the Financial Regulator". "Your call may be recorded for training purposes".


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## Sunny (5 Sep 2007)

*Re: Public consultation on credit card surcharges*

So basically we are telling people that you will have to pay more unless you are willing to carry around thousands of euro and pay in cash??? 

Surely it is up to businesses to make it convenient for customers to do business with them. If it costs them so much to administer credit cards, don't offer to accept them. I would prefer that than paying a 7.48% surcharge and knowing I am being screwed with a higher price than advertised. But its ok I suppose because they are telling me upfront that they are screwing me????


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## Purple (5 Sep 2007)

*Re: Public consultation on credit card surcharges*



Sunny said:


> But its ok I suppose because they are telling me upfront that they are screwing me????


It's OK because you have the choice not to buy.


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## Sunny (5 Sep 2007)

*Re: Public consultation on credit card surcharges*



Purple said:


> It's OK because you have the choice not to buy.


 
This argument gets thrown about in every debate about consumer rights and companies pricing policies. How does that make it right that companies have the right to advertise one price but then increase the price it actually charges by introducing a so-called surcharge which not only covers the costs incurred administrating the credit card payment but also adds a margin onto the final selling price for extra profit for the company.  I would happily (well not really) pay the surcharge if I knew that every cent was to cover a cost incurred by the company due to my method of payment. However, if they are keeping some of the charge for themselves, how is that not misleading consumers. 

Also, if retailers are so unhappy with the cost of accepting credit cards, why don't they get together and do something about it or else do what you suggest and 'not buy' or in this case refuse to accept the credit card. That will get the banks and credit card companies thinking


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## HorseBox (5 Sep 2007)

*Re: Public consultation on credit card surcharges*



Purple said:


> It's OK because you have the choice not to buy.


 
That's not choice. You can't just tell someone that they can like it or lump it, and call that consumer choice. Particularly if their original purchase decision was made on a differently-advertised price, and particularly if everybody is applying a surcharge, such as in the case of online airline bookings. Where do you go for an alternative?

It's like telling a very hungry person that they are welcome to buy the sandwich from you that you are holding in your right hand, but that they will also get punched in the face with your left hand if they choose to buy it. It isn't a real choice. Starve, or get a punch in the face if you eat.

Also, Brendan said: "The cost of a direct ski holiday for the minority who want to finance their holiday using the credit card is the additional €50."

People who finance purchases using a credit card already pay for the privellege in the form of interest to the bank who issued it. If the retailer also charges for its use, it is a double whammy.


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## ubiquitous (5 Sep 2007)

*Re: Public consultation on credit card surcharges*



Sunny said:


> Also, if retailers are so unhappy with the cost of accepting credit cards, why don't they get together and do something about it or else do what you suggest and 'not buy' or in this case refuse to accept the credit card. That will get the banks and credit card companies thinking



Its impractical to expect businesses in most consumer sectors such as grocery, petrol retailing etc to not to provide credit card facilities. They would be cutting their commercial throats by doing so.


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## Sunny (6 Sep 2007)

*Re: Public consultation on credit card surcharges*



ubiquitous said:


> Its impractical to expect businesses in most consumer sectors such as grocery, petrol retailing etc to not to provide credit card facilities. They would be cutting their commercial throats by doing so.


 
Exactly. Its a cost of doing business so why don't they include it in the their prices like the ESB and wage costs instead of adding on a surcharge that everyone knows more then covers the cost to the business of accepting the credit card.

What would peoples reaction be if the banks turned around and said maintaining ATM machines was costly and so they are introducing a surcharge of 5% on every cash withdrawal. Then when people complain, the banks turn around and say well if you don't like it, you can keep your money under the bed or use a laser/credit card to buy something. It is no different.


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## MOB (6 Sep 2007)

*Re: Public consultation on credit card surcharges*

"Watch a few episodes of Show Me The Money. Do you want financial industry regulatory legislation to be driven by the experiences of people like this? "

All joking aside, it's an issue that troubles me slightly.  Take as an example the "Section 68" letter which solicitors have to issue clients.  Most of the people on AAM would read this.  But most of my clients wouldn't.  I could put in there that if I need it, they will be obliged to donate their one remaining good kidney and they wouldn't blink.  I love the free market, but sometimes it feels a little bit dirty.......

I think perhaps that free\unregulated markets give less trouble in a society where ethical (business) behaviour is regarded as highly important.  I don't think we have one, though I have no doubt that it is getting better.


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## MOB (6 Sep 2007)

*Re: Public consultation on credit card surcharges*

"What would peoples reaction be if the banks turned around and said maintaining ATM machines was costly and so they are introducing a surcharge of 5% on every cash withdrawal. "

Well, for people in business, something like this is already a reality.  In some circumstances, the banks do indeed make an additional charge (a handling charge) for cash lodgements and withdrawals.


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## Sunny (6 Sep 2007)

*Re: Public consultation on credit card surcharges*



MOB said:


> "What would peoples reaction be if the banks turned around and said maintaining ATM machines was costly and so they are introducing a surcharge of 5% on every cash withdrawal. "
> 
> Well, for people in business, something like this is already a reality. In some circumstances, the banks do indeed make an additional charge (a handling charge) for cash lodgements and withdrawals.


 
Yes but maybe if people were encouraged to pay by credit card, businesses could save on the cash handling charge!!! And there is less chance of armed robberies! Or companies should introduce a "cash surcharge" to cover the handling charge if they are being consistant

But its not the point. I am talking about the man on the street using an ATM machine and being charged 5% because it costs the banks money paying security firms to fill the ATM machines with cash.


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## ubiquitous (6 Sep 2007)

*Re: Public consultation on credit card surcharges*



MOB said:


> Take as an example the "Section 68" letter which solicitors have to issue clients.  Most of the people on AAM would read this.  But most of my clients wouldn't.  I could put in there that if I need it, they will be obliged to donate their one remaining good kidney and they wouldn't blink.  I love the free market, but sometimes it feels a little bit dirty.......



I think you underestimate the value to clients of the S.68 letter and its practical necessity in protecting them from blatant overcharging. In the absence of a S.68 letter the client is pretty much powerless if the solicitor tries to blatantly overcharge them, unless the client wants to go the whole hog and file a complaint with the Law Society or refer the bill to the Taxing Master. From experience, I know that clients are generally reluctant to involve themselves in these processses so the S.68 letter can be very important to them.



Sunny said:


> Exactly. Its a cost of doing business so why don't they include it in the their prices like the ESB and wage costs instead of adding on a surcharge that everyone knows more then covers the cost to the business of accepting the credit card.



I buy fuel every week with my credit card. I often wonder how on earth the credit card company ends up with almost the same margin on a €50 petrol transaction as the retailer gets. I also wonder why the guy who pays with a €50 note instead of a credit card doesn't get some sort of incentive for paying in cash, as the retailers margin on the cash transaction will be much higher. Is the guy with the €50 note effectively subsidising me?


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## Sunny (6 Sep 2007)

*Re: Public consultation on credit card surcharges*



ubiquitous said:


> I buy fuel every week with my credit card. I often wonder how on earth the credit card company ends up with almost the same margin on a €50 petrol transaction as the retailer gets. I also wonder why the guy who pays with a €50 note instead of a credit card doesn't get some sort of incentive for paying in cash, as the retailers margin on the cash transaction will be much higher. Is the guy with the €50 note effectively subsidising me?


 
But thats not your concern. As you stated above the petrol station has decided that commercially it needs to offer the facility to pay by credit card as it might offer a competitive advantage over ones that don't offer it. If the retailer is worried about the size of the margin that he is getting compared to cash, they are free to just accept cash and not credit cards. However, they know they will probably make more sales by accepting credit cards. And as also mentioned above in another post, handling cash incurs its own costs. Why aren't these passed on the consumer in the form of a surcharge?


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## Jethro Tull (6 Sep 2007)

*Re: Public consultation on credit card surcharges*

Taking Ryanair as an example I have no option but to use my credit card as they do not accept laser from Ireland (they'd make less money from sneaky charges if they did I suppose). How in god's name is it fair that I am charged a surcharge for using the only method the company has given me to pay?


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## ClubMan (6 Sep 2007)

*Re: Public consultation on credit card surcharges*

There are other airlines.


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## ubiquitous (6 Sep 2007)

*Re: Public consultation on credit card surcharges*



Sunny said:


> And as also mentioned above in another post, handling cash incurs its own costs. Why aren't these passed on the consumer in the form of a surcharge?



Good point. If a business such as a travel agent was to introduce a policy that there would be a €x "cash handling fee" every time someone decided to pay for their holiday with cash, would you support this?


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## Jethro Tull (6 Sep 2007)

*Re: Public consultation on credit card surcharges*



ClubMan said:


> There are other airlines.


 
I'm talking about the principle of the matter from a consumer affairs point of view. This is an unavoidable charge if an irish person is booking so should be part of the fare.

They're not the only ones doing it either, just picked them as an example. 

Considering that airlines are meant to advertise fares inclusive of taxes and charges now (has this legislaton become law or is it still only in the pipeline) how do are lingus get away with charging an unadvertised 6 euro booking fee?


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## Sunny (6 Sep 2007)

*Re: Public consultation on credit card surcharges*



ubiquitous said:


> Good point. If a business such as a travel agent was to introduce a policy that there would be a €x "cash handling fee" every time someone decided to pay for their holiday with cash, would you support this?


 

No. Just like I don't support a travel agent saying that there is a €x "credit card fee" everytime I didn't feel comfortable carrying anything up to thousands of euro of cash down to my local travel agent and so paid by credit card.

But if they are going to have credit card surcharges, not why cash surcharges? Both are absurd but there is no difference between the two.


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## Jethro Tull (6 Sep 2007)

*Re: Public consultation on credit card surcharges*



Sunny said:


> But if they are going to have credit card surcharges, not why cash surcharges? Both are absurd but there is no difference between the two.


 
agreed. consumers are being charged to pay for a companies CC fees but not cash handling fees, why is this?


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## ClubMan (6 Sep 2007)

*Re: Public consultation on credit card surcharges*



Jethro Tull said:


> I'm talking about the principle of the matter from a consumer affairs point of view. This is an unavoidable charge if an irish person is booking so should be part of the fare.


So everybody - even those who would otherwise/previously have paid a lower or no surcharge - should be hit with the same (presumably higher) charge?


> Considering that airlines are meant to advertise fares inclusive of taxes and charges now (has this legislaton become law or is it still only in the pipeline) how do are lingus get away with charging an unadvertised 6 euro booking fee?


 Don't think that any legislation on this has come into force yet. See here.


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## Jethro Tull (6 Sep 2007)

*Re: Public consultation on credit card surcharges*



ClubMan said:


> So everybody - even those who would otherwise/previously have paid a lower or no surcharge - should be hit with the same (presumably higher) charge?


 
if you are booking from Ireland there is no other way of NOT paying it. hence its not really a surcharge but a fee that applies to ALL Irish based customers.


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## ClubMan (6 Sep 2007)

*Re: Public consultation on credit card surcharges*



Jethro Tull said:


> if you are booking from Ireland there is no other way of NOT paying it. hence its not really a surcharge but a fee that applies to ALL Irish based customers.


_VISA Electron _cards attract no surcharge. Aren't they available in _Ireland _- e.g. see [broken link removed]?


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## ubiquitous (6 Sep 2007)

*Re: Public consultation on credit card surcharges*

The policy makers and the public at large don't seem to have any problem with the plastic bag surcharge aka levy. What's the difference between that and a plastic card surcharge?


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## Sunny (6 Sep 2007)

*Re: Public consultation on credit card surcharges*



ubiquitous said:


> The policy makers and the public at large don't seem to have any problem with the plastic bag surcharge aka levy. What's the difference between that and a plastic card surcharge?


 
Because its like a tax. When the retailer charges me the 15c or whatever it is, I know this money is being paid in full to the government so the retailer is not getting a hidden margin. The same can not be said for credit card surcharges. Ryanair will never convince me that they were charged the 7.47% surcharge by the credit card company that they charged me to process my transaction. (unless they can me show that they were!)

Businesses who complain about the cost of accepting credit cards should either accept that it is a cost of doing business like ESB, Wages, Security etc or not offer the facility to pay by credit card. They have the choice to 'walk away' from the system. Why should we pay more bcause of their decision not to???


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## Jethro Tull (6 Sep 2007)

*Re: Public consultation on credit card surcharges*



ClubMan said:


> _VISA Electron _cards attract no surcharge. Aren't they available in _Ireland _- e.g. see [broken link removed]?


 
Fair enough, I was told on boards.ie that Visa electron was not available in ireland. 

However my guess would be that 95%+ of bookings are made via conventional Visas/mastercards. And in any case the fee can often amount 20-30% of the fare if you buy during a sale.

In any case I can't imagine many consumers going to the hassle of buying a gift card every time they want to book a flight.


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## pat127 (6 Sep 2007)

*Re: Public consultation on credit card surcharges*



ubiquitous said:


> I buy fuel every week with my credit card. I often wonder how on earth the credit card company ends up with almost the same margin on a €50 petrol transaction as the retailer gets. I also wonder why the guy who pays with a €50 note instead of a credit card doesn't get some sort of incentive for paying in cash, as the retailers margin on the cash transaction will be much higher. Is the guy with the €50 note effectively subsidising me?



Interesting point! As the retailer’s overall banking charges are reflected in the price he charges the customer then the credit card user takes his share of them before paying the surcharge. One hopes that the retailer keeps his credit card charges out of the general pot but even if he doesn’t the credit card customer is still paying a share of the cash, cheque and other such charges. Discrimination or what? That sounds to me like the credit card user should demand a discount!

Can anyone actually set out the actual charges for different types of payment instruments, even if on a relative basis (e.g. if it costs x to process a cheque it takes y times x to process something else)?  It was always my understanding that cash is the most expensive to handle and electronic transactions the least but I remain baffled by Brendan’s statements in the IT article when he writes “So why does a business offer a discount for paying in cash? It’s simply because it costs them less”. He goes on elsewhere in the context of using direct debits to write “It is very expensive to process cheques and cash”.  Am I missing something?


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## z103 (6 Sep 2007)

*Re: Public consultation on credit card surcharges*



> but I remain baffled by Brendan’s statements in the IT article when he writes “So why does a business offer a discount for paying in cash? It’s simply because it costs them less”. He goes on elsewhere in the context of using direct debits to write “It is very expensive to process cheques and cash”. Am I missing something?



If a business gets paid in cash, they have use of the money straight away. It's good for cashflow. If they get paid with a cheque, they have to wait for it to clear (if it clears). With credit cards, they still have to wait for funds to clear, and also have to pay the card processing company a fee.

For our company, the order of preference is like this;
1. Cash
2. Cheque
3. Credit card

For convenience, (administration) it's like this;
1. Credit card
2. Cash
3. Cheque.


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## pat127 (6 Sep 2007)

*Re: Public consultation on credit card surcharges*



leghorn said:


> If a business gets paid in cash, they have use of the money straight away. It's good for cashflow. If they get paid with a cheque, they have to wait for it to clear (if it clears). With credit cards, they still have to wait for funds to clear, and also have to pay the card processing company a fee.
> 
> For our company, the order of preference is like this;
> 1. Cash
> ...



Thanks for a clear explanation, Leghorn.


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## Brendan Burgess (8 Sep 2007)

*Re: Credit card surcharges consultation - closes today Friday 7th*

I have submitted this thread and the earlier thread on directski.com's surcharge to the Minister.

The debate has been excellent. 

Brendan


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## Brendan Burgess (17 Apr 2013)

A good job that they did not ban Credit Card surcharges. They wouldn't be able to charge those paying the LPT the extra bit. 

Brendan


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