Cash for cash-back.. Is that even legal?

[watchcoll]

http://www.thisismoney.co.uk/money/cardsloans/article-2363930/Why-pay-use-credit-debit-card.html

 

According to that, 8p for every transaction made on a debit card. On a sale of 40p (for the pack of chewing gum, the £50 cash back isn't exactly a sale) the retailer loses 8p. Doesn't make business sense to sell your stock for a loss. I used to work on West Street for a shop that didn't do cash back & the amount of people walking out leaving chewing gum on the counter every evening cos they couldn't get cash back was in the dozens.

Small retailers need to make a profit. I can fully understand why they would charge in this case.

[Beligerence]

http://www.thisismoney.co.uk/money/cardsloans/article-2363930/Why-pay-use-credit-debit-card.html

 

According to that, 8p for every transaction made on a debit card. On a sale of 40p (for the pack of chewing gum, the £50 cash back isn't exactly a sale) the retailer loses 8p. Doesn't make business sense to sell your stock for a loss. I used to work on West Street for a shop that didn't do cash back & the amount of people walking out leaving chewing gum on the counter every evening cos they couldn't get cash back was in the dozens.

Small retailers need to make a profit. I can fully understand why they would charge in this case.

 

Charging for a debit card transaction is fine, I'm not disagreeing with you. It's the extra charge for having cashback which is needless but you evidently haven't read my last post properly.

[watchcoll]

Charging for a debit card transaction is fine, I'm not disagreeing with you. It's the extra charge for having cashback which is needless but you evidently haven't read my last post properly.

 

Or perhaps you don't understand mine? How do you know it is needless, from the retailers point of view? The extra charge for cash back could be to either deter lazy people (who can't be bothered to queue for a cash machine) from abusing the goodwill of a service the retailers provides at a detriment & cost to themselves. Or a fair charge to those same people who have no right to expect anything for free from a private business trying to operate at a profit - they are providing a service that has a demand, so expect to pay for it!

It's a very specific circumstance for shops around the city centre that are situated around the bars etc. The likes of tesco can probably swallow the cost. But a small franchise probably can't.

There is also the possibility it is a deterrent. Some shops don't want to be giving out cash back too often - imagine on a Friday night on Division Street. 10 people come in in the space of an hour, buy a 40p pack of chewing gum with £50 cash back which not only causes the retailer a loss on their profit margins & they've also now ran out of cash cos they never had £500 in the till to start with.

Small businesses are not banks. Even the metro tesco on West Street had to put restrictions on their cash back when they opened purely because that many people were using the shop as a bank in the evenings (fags & £50 cash back) they kept running out of money in the tills, never mind that fact the 1p profit margin on a pack of cigarettes was being eaten up by the 8p card charges.

 

So, what may seem needless to you might actually be imperative to the shop owner. The consumer has the choice to vote with their feet & go elsewhere if they so choose. The business owner has the right to run their business as they see fit in order to earn themselves a living. Welcome to the free world!

[Beligerence]

Charging for the initial transaction would deter most anyway, then charging extra for the cashback is a needless procedure. The retailer has already made his fee back by charging for the initial debit card transaction.

 

A retailer doesn't have to give cash back if they are running low on cash.

[watchcoll]

I believe the retailer wasn't charging for the transaction, they were charging for the cash back.

 

Many people have the view, raised earlier, that giving cash back to customers reduces their cash handling costs. Less cash to bank etc. However, shops also have to pay to "buy" cash from banks & get it delivered securely or risk collecting it themselves. Not that many people pay with cash anymore. Small shops need to keep what cash they have as a till float/ cash float. There is no benefit in giving it all away to customers for free & then having to pay to get more delivered. The retailer could choose to not offer cash back at all. Or they could offer the service with the cost passed onto the consumer. Like I said, Spar won't make the same income as Tesco so can't swallow all the associated costs.

It is not always as simple as the retailer being a bit cheeky.

If people really don't want to pay to withdraw their money, then they can use a free machine or visit a bank.

[Beligerence]

Charging for the cash back but not for the initial transaction is a retarded way of running a business. Especially when you can simply withdraw the offer of cash back if your till is running low anyway.

[watchcoll]

Ok, if you say so.

[Beligerence]

Aren't forums wonderful where people can have different opinions.

[watchcoll]

Indeed they are!

[Obelix]

There is no reason to add on £1 for providing cashback though. If a debit card transaction is for 50p, or for £50.50 (providing the customer £50 cashback), the cost to the retailer is exactly the same. It's only credit card transactions that carry a %age fee for retailers, debit card transactions are fixed fee no matter how large it is.

 

Therefore, adding a pound on just to provide cashback is rather cheeky. If they are charging a pound for using the debit card to pay with in the first place, then that is probably fair enough.

 

Debit fee interchange is not a fixed rate, it is 0.2%+1p for transactions. Then there is the acquirer margins as well.