The Government turns the screw even further on your reward credit cards

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• Lev441 says:

  18 Dec18 December 11:29

  Why has this whole ruling come in, in the first place?

  Isn’t it clear that the end customer (us consumers spending on their cards) are not going to see any reduction in prices…?! It’s just madness.

  • Rob says:

    18 Dec18 December 13:27

    You will see reductions in prices. Simple economic theory says that lower costs will eventually bring down prices. If existing businesses decide to pocket the saving to fatten their profit margins, new entrants will come into the market because they see extra-large profits being made. These new entrants create price competition and prices come down.

    • Callum says:

      19 Dec19 December 14:52

      I’m no economist but that sounds absurd to me. How much are shops going to benefit by really – maybe 0.2% on card transactions, so probably not much more than 0.1% in total? Even if the drop is passed on in full it’s well under 1%. So new players are going to jump in to take advantage of the “extra large” profits of a small fraction of 1%?

      • Rob says:

        19 Dec19 December 17:40

        Not on one event obviously. But, over time, if profit margins widen new entrants are attracted – common sense as well as theory!

        In reality, stuff like the big hike in minimum wages will swallow up savings from small stuff like this.

        • Callum says:

          19 Dec19 December 20:12

          But this IS one event?

          I don’t think it’s common sense that if profit margins widen by well under 1% new players enter at all – quite the opposite in fact.

          As I said, I’m no economist so can’t say under economic theory you’re wrong, but it most definitely is not common sense!

  • Nick says:

    18 Dec18 December 13:54

    It’s not really anything to do with the customer- I don’t think anybody is even pretending that it’s the case. Basically, merchants are fed up with paying (what they consider to be) high payment processing charges, in particular because the interchange element of that cost is set by VISA/MC. They have no viable alternative but to take payment via those schemes, so they are going after the schemes themselves on competition grounds. Mastercard is being sued; VISA didn’t want any trouble so voluntarily committed to reducing its fees even before the EU legislation comes in to place.

  • mark2 says:

    18 Dec18 December 13:55

    Why?
    There are people in Brussels whose job is to make regulations. So they make regulations, whether they are needed or not. Then there are people in this country whose job is to ‘enhance’ European regulations so they do.

• Cape2Cairo says:

  18 Dec18 December 13:06

  Rudimentary knowledge of economics will tell you that reducing the monopoly rent earned by an oligopolistic cartel (this is what we are talking about here) can only be a good thing for the final consumer, as well as for the intermediary businesses along the way.

  I would not worry about the difference going to payment card processors: competition has already increased with new entrants from the app space rapidly taking over from the extortionate incumbents who served the industry in the past. As in other space (including airlines), new entrants will ensure that competition works and the ultimate benefit accrues to consumers.

  As in the transport, energy, and telecoms space, the EU is an extremely benign influence for higher cross-border competition leading to increased consumer benefit. Fee transparency and limits to the abuse of market power are good policy measures for the aggregate European population, even if they mean those of us who are better off get fewer Avios off of a card transaction.

  • mark2 says:

    18 Dec18 December 13:56

    Which year of your Economics degree are you studying?

  • Charlie says:

    19 Dec19 December 22:39

    Competition leads to winners, winners leads to monopoly, monopoly leads to competition… you get the idea. It’s cyclical!

• will says:

  18 Dec18 December 13:19

  Points collecting aside for a moment, it’s better for the population as a whole to just pay lower fees, and eventually (over years) the consumer will see the lower fees.

  One interesting point will be if a retailer takes a lloyds/mbna issues amex, presumably they’ll be charged at the standard Amex rate (my merchant account charges 1.9% for all Amex regardless of who issues it) but lloyds will only be able to apply to 0.3% interchange fee, so someone will be making a mint on these cards as the middle man.

  • Nick says:

    18 Dec18 December 13:57

    As mentioned above, that is the case for merchants on a fixed rate deal but not for the bigger merchants who pay on an Interchange Plus deal. They simply pay the interchange, scheme fee and a small margin on top to cover the costs of the payment processor. They will see an immediate, significant reduction in their charges. The merchants on fixed rate deals will, of course, have the ability to renegotiate based on the lower interchange rates too.

• mark2 says:

  18 Dec18 December 13:57

  Looking at the card machines on the small shop counters they seem to belong to the banks who also issue the cards.

• Liz says:

  18 Dec18 December 15:24

  OT but credit card related: I had coffee yesterday at my local cafe and checked beforehand to see if they were taking part in the Amex Small Shop promotion – they were. I went to pay the bill with my BA card and the lady insisted she didn’t take Amex. I told her that she was listed on the Amex site as taking part. She said she had received a pack from Amex but she never sign up for it. Anyway we tried my card and it went through ok and I showed her the instant email giving me my £5 credit. She has been open for a couple of years and never knew her card machine took Amex – she reckoned whoever she got the card machine from must have signed her up for Amex – how is it possible to have a business and not know you take Amex – are there other business out there like that?! I was obviously the first person to pay for anything in her cafe with Amex!

  • Nick M says:

    18 Dec18 December 16:35

    Our local post office shut and has been temporarily replaced with a porta-cabin… one of the people in there insists that they don’t take AMEX despite it working on every occasion that I have insisted on trying! I think it might be a case of the business owner telling staff they don’t wish to take amex rather than the functionality not being there?

    We had breakfast at a cafe listed on the map last weekend, went to pay and there was a “cash only” sign up… fortunately a quick call to AMEX sorted out the statement credit!

    • Liz says:

      18 Dec18 December 17:08

      We went into a new pet shop in town last weekend and asked if they took Amex to which they said yes. All 3 of my cards rejected but they insisted they took it and had the sign in the window. I called Amex from the shop and they said they were registered under their two other shops but this new shop was not registered. She agreed to credit the £5 to my account and I paid with my Virgin Visa – credit came through the next day! I genuinely don’t think the cafe owner knows about Amex. She is now interested in my Airmiles stories of how we are now booking Business Class flights for our holidays. I told her to look online at HfP so hopefully another customer for Rob.

    • Tilly71 says:

      18 Dec18 December 19:33

      My local PO on two occasions now has declined amex on their machines but strangely allows first time MC. Is there a way from behind the counter that they can push a button to decline a payment or was it a genuine error with the terminal?

      • Rob says:

        18 Dec18 December 23:30

        I don’t think they can deny it – but if it is a franchise or a sub Post Office, as opposed to a main one, it is only very loosely controlled by the PO and I imagine the owners have a lot of leeway. After all, why would they care if they were a main PO? The fee isn’t coming out of the staffs pockets.

  • harry says:

    18 Dec18 December 17:20

    I’ve been in several Spars where I was the first Amex user 🙂

    I had to educate the staff in how to tap the Amex icon etc on the till even though it has a message ‘not set up’ etc.

  • Tariq says:

    18 Dec18 December 19:23

    A business that I do some freelance work for run a chain of retail shops. Some of which had Amex enabled on their card terminals and others didn’t. Every few months the head office would send a note to say ‘don’t accept Amex even if you know it goes through your terminal!’. None of the shops had Amex POS materials so it was clearly not intentional. Eventually they managed to remove Amex acceptance from the terminals across the estate. I should imagine that there are many small businesses that unintentionally accept Amex.

  • Ludicrous says:

    19 Dec19 December 01:15

    I used to work for a restaurant that accepted AMEX when I first started working there, they changed the payment supplier and the new machines didn’t accept it (they changed the company on the promise of cheaper processing fees).

    In the end, they owner decided to go back to the original company and as no one had really complained when we told them that we couldn’t accept them, we were told to continue to tell customers that we couldn’t accept it, to save on the fees and apparently it took longer to receive the money for the Amex transactions,

    The restaurant is still listed on the shop small website this year, so it would be interesting to see if they’ve had to tell people no or not.

• RIccati says:

  18 Dec18 December 15:44

  One thing the Government (PSR/FCA/BOE) have just one is to create the monopoly of AMEX-issued cards on points and remove the competitive, consumer-beneficial products such as Lloyds Avios with no FX fee.

  AMEX can continue charging FX fee and if one would like to earn some kind of rewards they will HAVE TO pay the FX fee, even within Europe — the common payment area (for euro but).

  • ankomonkey says:

    18 Dec18 December 20:32

    You’ve gotta hope Amex don’t start charging a fee for all of their cards, knowing people will have to use them if they want decent rewards.

    • RIccati says:

      19 Dec19 December 06:48

      It’s a possibility, for AMEX to start charging increased fees, and the timing is ripe for it — a lot of people cancelled BA Premier and Platinum Charge this year (devaluation, withdrawal of airline status benefit).

      But I would like to return to the Lloyds Avios product and how beneficial to consumer it is. Given that

      For the sake of merchants paying 10p or so less on an average transaction in payment costs, with an uncertain prospective for the effect to trickle down to consumers (see the economic 101 theorising above), a significant demographic will have no choice but to pay a WHOPPING 3% fee on their spending abroad — the other fee-free credit cards (Halifax Clarity, Post Office) are actually hard to get in terms of credit scoring.

      • Callum says:

        19 Dec19 December 14:58

        I doubt Halifax Clarity is any harder to get than the Lloyds Reward card. And there are debit cards with no fee.

• Simon says:

  19 Dec19 December 13:10

  I can’t help thinking getting the 3% fee most cards charge on foreign transactions would help consumers a lot more than this.

  It will be interesting to see what retailers especially the small ones do about accepting AMEX, I imagine most people if they go to a small shop who don’t accept AMEX just use another card and it doesn’t influence if they will return to the shop.

  • Fredric says:

    23 Dec23 December 23:16

    From a ex-UK perspective I can tell you that the 3% you have here is a rip-off. Standard fee is 1,5% in scandies and many card have 0%. Even Amex charges “only” 2%. I also note that Amex-plat have 0% in the US.

    • Fredric says:

      23 Dec23 December 23:18

      And no “debit cards from hell” either with fixed fees per purchase…

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