The Register® — Biting the hand that feeds IT

Comments on: Lords to rule on overseas credit card protection

Most Interesting! 

Posted Monday 8th October 2007 11:21 GMT

Gates Horns

Most interesting , given the simple fact that Credit Card Providers losses to bad lending out weigh frauds by a very massive margin .

To offset these losses , they have combined three methods of recovery in the form of interest on the outstanding balance then charge card issue and maintenance fees and finally on the merchant side is the basic merchant fee levy which can range from a low of .75% to 5% or an approximate average of 3% , plus other charges or an outright rejection of the application to be a merchant !

As with all businesses they are not a charity and normally run a full recovery of all operational costs at all times !

The other aspect of the merchants contract is the payment is in a form of controlled escrow and the Banks reserve the right to recall the funds within the grace periods as defined by the International Co-operative Card Brands who maintain the required international transaction clearing interface to provide world wide transactions . However the issuing Banks within the scheme remain responsible for the outstanding debts incurred by card user and can levy assorted control fees and charges !

The customer of course literally pays three ways to support the bad debts and fraudsters ,and the cash paying customer effectively ends up subsidizing credit card users most of the time unless the fairer merchant specifies fee extra for card users !

As to why they want to change the playing field can be put down to total greed , and can only be more thicker icing on the cake and another way to milk the paying customer of even more money then before !

European Perspective 

Posted Monday 8th October 2007 11:36 GMT

It would be good to understand what similar protection our other EU colleagues have.

I think the UK should propose an EU wide compenstation scheme, the credit-card companies can afford it and it would mean that an internet transaction within the EU would be treated the same no matter where the credit card was issued.

The argument against would be that UK company law means that the risk is low whereas in some EU states the risk might be great and UK card issuers will not want to be exposed to the risk in these EU countries (if indeed this is the case). Hence, it would be good to have some statistics...

Hmm... 

Posted Monday 8th October 2007 11:48 GMT

As heystoopid says, Card Issuing Companies are quite happy to take big chunks of money from customers, but don't forget that they also charge merchants for the "privilege" of using their system (some as much as 3.5% on each transaction!)

There is also the fact that if a card is used fradulently and subsequenly a charge-back is actioned (even when the transaction was correctly authorised), the merchant loses out twice, because they have to pay back the money they took for the transaction *and* they've lost the value of the goods.

This of course ties in with the recent law change... 

Posted Monday 8th October 2007 11:51 GMT

Thumb Down

...which means if you feel your card is being used in an illegal way (id theft, for starters) you cannot report it to the police, you have to report it to the card company who will investigate it, and report it to the police if they feel it is needed.

"the merchant loses out" 

Posted Monday 8th October 2007 16:47 GMT

"if a card is used fradulently ... the merchant loses out"

Surely at the end of the day it's only ever Honest Joe Public that ends up paying, whatever the intermediate details might be; the merchant just accounts for fraud/shrinkage/etc by raising prices to compensate? (Admittedly that's probably a bit tricky when all prices are required to end in 9.99 like they apparently are in the UK...)

Small business perspective 

Posted Tuesday 9th October 2007 05:35 GMT

Very small businesses get charged percentages around 5.5% in Australia.

"the merchant just accounts for fraud/shrinkage/etc by raising prices to compensate?" assumes competitive forces give them the freedom to do so.

Don’t Miss

Dollar101 uses for a former merchant banker

Comment Innovators who work out the best one will make a killing

The Year in Operating Systems: No battle of big ideas

Small change for 2009

Photography: Yes, you have rights

Comment Unless the police say you haven't

Enormous HP box spotted from space

Exclusive pics of Peterborough packaging pandemonium