Paying by switch

[Bearworld]

my local shop charges 30p when pay by switch, even when the bill is over �20. Is this legal and if any, what charges do they incur by accepting switch payments?

[Loosehead]

I'm pretty sure there is no charge for debit cards so they are taking the p!ss. It is legal though as suggested, try boycotting the shop.

[Sammy Snake]

Our corner shop charges 35p no matter what you spend.  And if you want cashback, that will cost you �1!!

A card transaction will cost the retailer in a roundabout way.  When his bank charges are calcluated, the number of card transaction / cheques / direct debits etc are taken into account.  The Bank i worked for charged something like 45p for each cheque, 40p for a directdebit and about 35p for a card transaction.

So basically the retailer is trying to cover his bank charges by making customers pay for card transactions, even though he is actually saving money as payong cash in over the counter would cost him more!

Our local shop aren't that clever though, they don't charge for paying by cheque so I do this now instead, even if it does hold the queue up for longer!

[IndieSinger]

Loosehead  - "no charge for debit cards"?! Firstly the (small) retailers have to rent the Streamline (or similar) swipe machine, then they have to pay for line rental plus they pay for the call charges everytime they swipe a card!

Other shops don't charge for paying by card because it can work out cheaper and safer than holding cash in the till and then banking it, but it depends on how most of the customers pay. These shops often cover the costs that they have to pay out by increasing the price of their produce.

So it could be the case that the shop in question likes to keep the shop prices down and only charge extra if people pay in a more expensive way.

[Oneeyedvic]

The practice is called surcharging and is not illegal.

Yes there is a charge that the retailer has to pay - this varies upon the deal they can strike - typically up to 40p for debit cards and up to 2.5% for credit cards. Better deals can be done depending on negotiation and level of business.

A lot of businesses do cover this cost themselves - you will often see signs saying 'cards not accepted under �10' again that is because it is just not worth paying 40p on a transcaion where you may only 'make' a �1

 

Incidentally, in the UK there is no legal issues, but in certain states of the US it is illegal to surcharge.

[WoWo]

If anything you should see this as a positive thing. What they are basically doing is offering better value for cash customers. Lets say you buy a CD which is �14, in a big store which doesn't apply a surcharge the cost of the debit and credit card transation is factored into the purchase price so they might charge �15. But in a shop that uses a surcharge then this isn't added on and you pay �14.

Big shops like Tesco's, HMV etc etc will have a deal with a bank and pay a minimal transaction fee but for a small shop it's actually quite expensive. Credit cards use a percentage fee and debit cards a minimum transaction fee of something like 40p-50p plus a percentage.