totally off topic - but interesting...
surfing the web last night and came across a couple of holiday companies who added a surcharge for use / payment of a credit card [ not debit mind you] in completion of the transaction. Even this morning one quoted a % extra when discussing T&C's over the phone
i thought that this practice had been ' canned' but cannot find anything on a very brief trawl of the web this morning ?
anyone in travel or financial services able to comment ?
thanks
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EASYJET
I thought this was common with Easyjet / Ryanair etc.
Certainly nothing 'illegal' about making this charge.
I think, in years gone by, shops were not permitted to charge extra when paying by card - but that bit of regulation has gone long since.
Contract
The law's not been changed. Back in the mists of time, Barclaycard and Access forbade companies from charging a fee in their contract as they didn't want people to be discouraged from using their cards. At some point about 20 years ago, somebody took it to court and it was declared a restrictive practice.
Slightly diverging from the thread, a client of mine used to run a travel agency in Cas Vegas in the mid-60s. One day, his bank manager came to see him about this amazing new product called Barclaycard, which would boost his sales of package holidays. People could use their Barclaycards to buy holidays now, he'd get his money straight away but the customer needn't pay for months - if ever. And all this for a measly 8% commission !!
He told me that he looked the bank manager straight in the eye and said, "That sounds very good, but it's not for us. We only earn 7% commission on our sales."
Artificial splitting?
It may be you are thinking of the practice of artificial splitting for VAT purposes that was used by retailers.
On vague recollection, retailers would claim that part of sales by card constituted finance services and was therefore not subject to VAT. This despite that the total sale price was the same regardless of how it was paid. It failed in the courts I believe.
Who ? Me ?
It may be you are thinking of the practice of artificial splitting for VAT purposes that was used by retailers.
Who ? Me ?
No, that was another case. This was a legal case, not a tax case.
The OP
I was talking to the OP. It just struck me that might have been the "canned" practice they were referring to.It may be you are thinking of the practice of artificial splitting for VAT purposes that was used by retailers.
Who ? Me ?
No, that was another case. This was a legal case, not a tax case.
Clarifying
I was talking to the OP. It just struck me that might have been the "canned" practice they were referring to.It may be you are thinking of the practice of artificial splitting for VAT purposes that was used by retailers.
Who ? Me ?
No, that was another case. This was a legal case, not a tax case.
Ah right. Thanks for clarifying.
Not illegal, must be declared
http://www.caa.co.uk/docs/33/CAP1015CAAOFTApplicableConsumerLawGuidance.pdf
See para 4.32
Justification
I can see a definite commercial justification for a travel agent adding a fee for accepting credit cards.
A travel agent might only be making 10% commission on a holiday sale.
Credit card commission might be 3%.
So 30% of the client's gross profit (commission) is going in credit card fees!
Debit cards have a different charging structure, from memory it is not a %age of transaction value but rather a fixed fee per transaction of maybe something like 50p. Hence no commercial reason to charge for accepting debit cards as the card fees are miniscule in percentage terms.
The above different charging structure is why you'll find typically supermarkets will offer a cashback on debit cards but not on credit cards - it is profitable to offer cashback on debit cards but not on credit cards.
Credit Card Surcharges
In December 2011 the Government announced that credit card surcharges on holidays would be banned by the end of 2012.
According to the Citizens Advice site from 6 April 2013 {June 2014 for small and new businesses} any credit card transaction can only be charged a maximum cost of the actual cost of processing the transaction. Which were spearheading the campaign.
The legislation says that you have to be told up front if a charge is to be made and they have to tell you how much the transaction costs if you ask.
Not quite banned
Alas, another legislative fudge then. Big talk about banning it from government, followed by legislation that waters that down. The legislation says that you have to be told up front if a charge is to be made and they have to tell you how much the transaction costs if you ask.
The cost is limited to how much it actually costs to process, but that cost is entirely determined internally. If a company just makes up a figure for the processing cost, how would you go about challenging it? For that matter, is it likely to be worth it for an individual? No doubt, with the worst excesses limited, Citizens Advice can't really justify pursuing this further either. It's not like there aren't plenty of other issues for them to deal with.