[tdenson]

Anyone know the answer to this, as I have Googled in vain. I was wondering if there is any financial benefit to contactless payment regarding the level of commission the retailer has to pay compared with conventional credit card and debit card payments. I have a vested interest in this as my family own a small shop and 90% of the transactions are less than £20.

[Daveoc64]

Quote:

Originally Posted by tdenson

Anyone know the answer to this, as I have Googled in vain. I was wondering if there is any financial benefit to contactless payment regarding the level of commission the retailer has to pay compared with conventional credit card and debit card payments. I have a vested interest in this as my family own a small shop and 90% of the transactions are less than £20.

The principle is the same as any debit or credit card transaction, but the rate is usually more favourable to merchants as the industry wants to encourage the adoption of contactless payments.

With any of these charges the exact rates will vary based on a whole host of factors and they're usually confidential, so you're not likely to find them online.

[d123]

Quote:

Originally Posted by tdenson

Anyone know the answer to this, as I have Googled in vain. I was wondering if there is any financial benefit to contactless payment regarding the level of commission the retailer has to pay compared with conventional credit card and debit card payments. I have a vested interest in this as my family own a small shop and 90% of the transactions are less than £20.

Have you considered asking your payment gateway company? It's going to be different for a small B&M when compared to a national retailer, for example.

[tdenson]

Quote:

Originally Posted by d123

Have you considered asking your payment gateway company? It's going to be different for a small B&M when compared to a national retailer, for example.

Streamline (or rather Worldpay as they are now known) are a nightmare to deal with on the phone so I was trying to avoid that. I'm well of the difference in rate according to the retailers size and clout, but I was just interested in whether there was any difference at all between the two ways of paying.

[tdenson]

Quote:

Originally Posted by Daveoc64

The principle is the same as any debit or credit card transaction, but the rate is usually more favourable to merchants as the industry wants to encourage the adoption of contactless payments.

With any of these charges the exact rates will vary based on a whole host of factors and they're usually confidential, so you're not likely to find them online.

I wasn't looking for a specific figure, simply to know if there was a difference at all.
I'm a bit surprised that if there is a more favourable rate to merchants that Worldpay are not besieging me with marketing literature/emails telling me that.

[paulbrock]

barclays options here

http://www.barclays.co.uk/Cardsandpa...P1242558531141

looks like same rate regardless of contactless or chip n pin.

[sethpet]

Shops that have a minimum fee for cards dont get my business. Its a false economy and frankly ridiculous.

As a % of transaction value its easy enough to sink the annual costs into your pricing.
Besides its not like using your time to count cash, bag it and then take it tobthe bank is free for the trader

[Thine Wonk]

Quote:

Originally Posted by sethpet

Shops that have a minimum fee for cards dont get my business. Its a false economy and frankly ridiculous.

As a % of transaction value its easy enough to sink the annual costs into your pricing.
Besides its not like using your time to count cash, bag it and then take it tobthe bank is free for the trader

It isn't for small stores, my understanding is that debit card merchant fees tend to be flat rates eg: 50p, whereas credit cards tend to be a percentage.

When they process a debit card they are simply charging a fee for the payment processing service, but with credit cards it's a percentage of the sale value because the consumer credit act holds the credit card companies jointly liable for purchases should the retailer not deliver, go out of business or whatever, so there's an element of insurance by the credit card company which is not available for debit cards.

If you're a small shop and people come in and pay for something worth less than £1 with a debit card, then the retailer makes a loss. Tesco can afford to write this off as they are so big and generally people don't buy 1 item, but corner shops often can't afford to. Plus big stores have negotiated better terms with card processors because of their scale.

[tdenson]

I can understand a shop setting a minimum fee for debit cards (fixed cost per transaction) but certainly not for credit cards. At our shop we pay 1.2% to Worldpay for CC transactions. However, we also pay 0.8% to Natwest for the privilege of giving them cash to put in their bank. Thus the difference between the two types of transactions is 0.4% - and that's even without allowing for the extra cost of handling cash i.e. taking to the bank and underwriting any thefts (e.g. conmen doing sleight of hand fraudulent transactions which we've fallen foul of a few times). It really is a no-brainer to take credit cards for everything, and certainly not worth the adverse PR.

[tdenson]

Quote:

Originally Posted by Thine Wonk

It isn't for small stores, my understanding is that debit card merchant fees tend to be flat rates eg: 50p, whereas credit cards tend to be a percentage.
.

It's actually more like 20p

[alanwarwic]

Strange, I once recall reading that the fee was 2p for a transaction up to maybe £2.00, and for some reason, it jumped in very big steps so that, when it came to about £10, it looked high. (maybe the same as a debit for £10, not sure).

That 2p fee would make sense for the likes of Greggs who adopted it fast.

[sethpet]

All about to get cheaper for shop owners

Visa has already announced its new interchange rates for UK debit cards to its members – 0.2% of transaction value + 1 pence per transaction (capped at a total of 50p) for chip and pin transactions. These changes will take effect as of 1 March 2015

http://www.cardswitcher.co.uk/2014/1...ees-to-change/

[rjb101]

Quote:

Originally Posted by sethpet

All about to get cheaper for shop owners

Visa has already announced its new interchange rates for UK debit cards to its members – 0.2% of transaction value + 1 pence per transaction (capped at a total of 50p) for chip and pin transactions. These changes will take effect as of 1 March 2015

http://www.cardswitcher.co.uk/2014/1...ees-to-change/

Shops will be charging more to except cash soon.

Edit. I forgot that the tax man cant see cash, he can only guess

[reclusive46]

Contactless is almost always cheaper for the merchant at the moment. American Express even has a promotion for many small businesses at the moment where they charge 1p for contactless transactions.

The new interchange rules on debit cards will make it much cheaper for merchants who mainly take low value payments.

[alanwarwic]

That post looks nought to do with shop onners, that was the intermediary price.

So methinks banks then add their own commission on to those fixed EU prices.

[tdenson]

Quote:

Originally Posted by alanwarwic

That post looks nought to do with shop onners, that was the intermediary price.

Nevertheless it contains plenty of conjecture over what might happen with the retailer. A very interesting read and I think things might well change for the better for small retailers.

[alanwarwic]

Yes, and they can only get cheaper.

Visa have the monopoly so price regulations were very much needed. After all, the new internet electronic money exchange system now gets costs for Visa ever closer to zero.

I imagine they could maybe even keep monies for 10 days, charge zero and still make a profit.