Saturday, 30 December 2017

When will they ever learn? Just when


Yet another failed intervention. 

When will these idiots learn about 'unintended consequences'?

Nearly every failure in financial services can be traced back to some ill thought through intervention by some grotty bureaucrat or economically clueless politician.


jack ketch said...

I haven't followed this one (is the ban a wholly British thing or something instigated by the EU?)-but I wonder if the consequences are really unintended...then as far as I know CC companies charge retailers for the privilege and if that is the case then even the grottiest of politicians would have been able to forsee the results. I do not believe any bureaucrat , miffed at Ryanair's obscene charges, would really think that retailers would simply shrug and take the loss.

Lola said...

JK. Then don't fly Ryanair.

jack ketch said...

Lola, personally I'm a fan of Ryanair and have been since Hahn was the tin hut hanger of a decommissioned USAAF fighter base and as such was unmarked on my German AA Map Of The Strassen- when the stewardesses were all colleens with bog trotting accents so thick as to be incomprehensible. Back when a Ryanair flight was a curious mix of starving backpackers on the home leg and 3 piece suits cheating on their expense accounts. Doesn't change the fact that their CC charges were an obscenity (although like many 'old hands' I got myself an 'electron' card just to be able to avoid them).

Mark Wadsworth said...

From the article:

"The Sunday Telegraph has learned that some retailers and other companies are planning measures to “sneak” around the rules. These include: refusing credit card payments; increasing shelf prices; introducing new “service charges” across the board."

How is that "sneaking"? Credit card companies charge retailers outrageous fees and retailers are free to refuse to accept them.

By the way, why don't people just use debit cards?

Bayard said...

"Doesn't change the fact that their CC charges were an obscenity"

AFAICR, the charges for debit cards were the same. As was pointed out to me when I grumbled about this to a friend, you just have to factor it in as part of the ticket price. Even with the extra 5% or whatever it was, Ryanair was usually still the cheapest.

"By the way, why don't people just use debit cards?"

I wonder that too. I've not used one for years. Doesn't debit card + overdraft = credit card anyway?

Rich Tee said...

You should use a credit card (as opposed to a debit card) for distance purchases over £100 because if the company goes bust before you get the goods you can reclaim the money from the credit card company.

I've always understood that to be the case anyway.

formertory said...

Not to mention that if the goods / services are unsatisfactory the credit card company will usually pitch in on the cardholder's behalf to coerce the retailer to play ball. That too, of course, was as a result of Government interference in the Consumer Credit Act; but people rely on it and so there's no reason why some sort of fee isn't reasonable to offset the costs.

A bit like the bellyaching about hospital car parking; someone has to cover the cost of not using the land for something more useful, creating the car park, and maintaining it. Don't want to pay? Get a bus or get a lift (to return to MW's original point).

Steven_L said...

It's an EU thing under the 'Consumer Rights Directive'.

I too pay for deposits and things over £100 by credit card so as to get my statutory S75 protection. I do wonder if this protection is the reason that paying by CC costs more. I think that the merchant services providers ask traders for bonds to ensure they are protected.

But I've recently started using PayPal credit. 4 months free credit when you buy anything over £150 and you get S75 protection from PayPal.

S75 isn't an EU thing by the way.

Dinero said...

Its even more obtuse when you factor in cash back credit cards. A person not using a credit card at all pays for the credit card service that they are not using and a person that is actually using the service does not pay for it, as they get cash to use it.

john b said...

Despite the tone of the Telegraph piece, this doesn't feel like a negative consequence at all. Most sane retailers will simply raise the standard price, which means that the weirdos who pay cash for things will be making a reasonable contribution to cash handling costs (which are usually higher than the 1-2% fees that credit card companies charge to merchants). A few insane retailers will stop taking cards and probably go bust. Win-win.

Lola said...

John B. I am a cash paying weirdo. All small retailers love cash as there are some useful 'efficiencies' available.

Mark Wadsworth said...

For the record, I am a debit card paying weirdo. I used to use a credit card a couple of years ago when things were tight to defer paying some expenditure by a month, but the mental stress of trying to work out how much would be taken from my account and when is not worth the few quid a month cash back they offered.

As to credit card quasi-insurance, most of my online purchases are less than £50, so far nothing has gone wrong and if it ever does, well so what.

@ JohnB, are you sure that cash handling charges are higher than credit card charges? I look at lots of profit and loss accounts when I'm doing tax returns, I've one client who sells tickets online (typical payments £50 - £100?) and the credit card company takes at least 5% of turnover. Do banks actually charge retailers money for simply depositing cash?