How do banks make money from your debit card? (SPLIT FROM DAK)

[Lootman]

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This topic is split off from the original DAK topic at viewtopic.php?f=9&t=38080&p=571062#p570539

Please continue discussion which is off-topic for DAK on this topic (chas49)

Out of interest, Lootman, why do you prefer using a credit card rather than a debit card? I tend to use both cash and debit cards and I feel safer that way. Both my sister and I had bad experiences with how easy it is to run up debts with CCs when we were young and ever since then, I use them only for large, occasional purchases and pay off the balance almost immediately. I have an intense dislike of knowing that I owe money, as opposed to my wife who doesn't seem to give a monkey's!

My credit card bills are all set up to be paid off in full every month via direct debit, so it is impossible for me to run up debts or pay any finance charges.

And (some) credit cards offer air miles, points or cashback, so it can work out cheaper than using cash or a debit card.

Plus I like the "float" of having up to 7 weeks before having to pay for an item.

That said paying in cash can sometimes get you a discount, or better service.

[pje16]

My credit card bills are all set up to be paid off in full every month via direct debit, so it is impossible for me to run up debts or pay any finance charges.

Mine too, have never paid a penny in charges or interest, very rarely use a debit card.

[gryffron]

Supermarket receipts used to say that using a debit card was charged 2%, but this was dropped a few years ago. No doubt , prices were adjusted up 2% to cover the cost. At the time ,I wondered why the cash buyer didn't get a 2% discount.

The reason it was on your till receipt was a VAT dodge. The supermarkets saved 20% of 2% of your VATable items by charging this fee to "banking services" which are free of VAT. 0.4% might not sound much, but multiply it by supermarket turnover it was a reasonable sum.

Gryff

[DrFfybes]

My cousin has a couple of pubs that mainly make their money from food.

We were talking about cards earler last year and he says he pays 0.5% to the card company, but also that the banks charge for him to bank cash. I said "0.5% doesn't sound too bad".

He said "It's still over £5k a month".
"Wow", I said, "That's a lot of pensioners' specials".

Paul

[Lootman]

My cousin has a couple of pubs that mainly make their money from food.

We were talking about cards earler last year and he says he pays 0.5% to the card company, but also that the banks charge for him to bank cash. I said "0.5% doesn't sound too bad".

He said "It's still over £5k a month".

"Wow", I said, "That's a lot of pensioners' specials".

£100,000 a month turnover on food is high for a pub. Nice to see some pubs doing well.

Does he prefer that customers pay in cash? Most folks I know who work in hospitality like cash, especially wait staff.

[swill453]

Does he prefer that customers pay in cash? Most folks I know who work in hospitality like cash, especially wait staff.

I think that ship has sailed. I'd imagine pubs and restaurants are 90%+ card transactions these days. I bet tip levels have reduced.

Scott.

[Laughton]

Pay by credit card - tip with cash. At least that's what I do.

[Lootman]

Pay by credit card - tip with cash. At least that's what I do.

Yes, that is the consensus of wait staff that I know.

[stevensfo]

My cousin has a couple of pubs that mainly make their money from food.

We were talking about cards earler last year and he says he pays 0.5% to the card company, but also that the banks charge for him to bank cash. I said "0.5% doesn't sound too bad".

He said "It's still over £5k a month".
"Wow", I said, "That's a lot of pensioners' specials".

Paul

Good God! The banks charge you to give them your money?

I'm sure there's a Monty Python sketch there somewhere, dying to get out!

Steve

[stevensfo]

Does he prefer that customers pay in cash? Most folks I know who work in hospitality like cash, especially wait staff.

I think that ship has sailed. I'd imagine pubs and restaurants are 90%+ card transactions these days. I bet tip levels have reduced.

Scott.

Don't think so. I visit my mum and relatives for 2-3 weeks a year and we go out for lunch a lot. If she insists on paying, she uses a card. I always use cash. Never, ever had a problem anywhere with cash. We always tip 5-10%.

Steve

[mc2fool]

Does he prefer that customers pay in cash? Most folks I know who work in hospitality like cash, especially wait staff.

I think that ship has sailed. I'd imagine pubs and restaurants are 90%+ card transactions these days. I bet tip levels have reduced.

Scott.

Don't think so. I visit my mum and relatives for 2-3 weeks a year and we go out for lunch a lot. If she insists on paying, she uses a card. I always use cash. Never, ever had a problem anywhere with cash. We always tip 5-10%.

Steve

In a recent 4 day trip to Manchester I came across 2 pubs and 2 cafes that didn't take cash. Cards only.

[Lootman]

In a recent 4 day trip to Manchester I came across 2 pubs and 2 cafes that didn't take cash. Cards only.

There are places like that in London too. But I am pretty sure that the wait staff do not like it, so you would have to examine their staff turnover to really see if it works.

I think that there will always be a significant subset of people who will always prefer cash

[Dod101]

In a recent 4 day trip to Manchester I came across 2 pubs and 2 cafes that didn't take cash. Cards only.

There are places like that in London too. But I am pretty sure that the wait staff do not like it, so you would have to examine their staff turnover to really see if it works.

I think that there will always be a significant subset of people who will always prefer cash

My barber only takes cash as does the greengrocers next door. My paper shop basically only takes cash but he does provide the option of paying by card with a modest ( and apparently illegal) surcharge.

Far more places only take a card though.

Dod

[Lootman]

In a recent 4 day trip to Manchester I came across 2 pubs and 2 cafes that didn't take cash. Cards only.

There are places like that in London too. But I am pretty sure that the wait staff do not like it, so you would have to examine their staff turnover to really see if it works.

I think that there will always be a significant subset of people who will always prefer cash

My barber only takes cash as does the greengrocers next door. My paper shop basically only takes cash but he does provide the option of paying by card with a modest ( and apparently illegal) surcharge.

Far more places only take a card though.

It might be 'illegal" to charge more for using a card, even if that practice is universal.

But a discount for cash seems to be OK.

Maybe it is a Covid thing that cash is "dirty"?

[mc2fool]

In a recent 4 day trip to Manchester I came across 2 pubs and 2 cafes that didn't take cash. Cards only.

There are places like that in London too. But I am pretty sure that the wait staff do not like it, so you would have to examine their staff turnover to really see if it works.

I think that there will always be a significant subset of people who will always prefer cash

My barber only takes cash as does the greengrocers next door. My paper shop basically only takes cash but he does provide the option of paying by card with a modest ( and apparently illegal) surcharge.

Far more places only take a card though.

It might be 'illegal" to charge more for using a card, even if that practice is universal.

But a discount for cash seems to be OK.

Maybe it is a Covid thing that cash is "dirty"?

The server at one of the cafes I was referring to, the cafe at the Whitworth Art Gallery actually, told me (on seeing my frown after my offering up a fiver and being told, card only) that they had "yet" to return to accepting cash since the pandemic. So maybe not "dirty" but I reckon some establishments found that taking only cards was a lot less faff and decided to stay that way....

[pje16]

My cousin has a couple of pubs that mainly make their money from food.

We were talking about cards earler last year and he says he pays 0.5% to the card company, but also that the banks charge for him to bank cash. I said "0.5% doesn't sound too bad".

He said "It's still over £5k a month".
"Wow", I said, "That's a lot of pensioners' specials".

Paul

Good God! The banks charge you to give them your money?

I'm sure there's a Monty Python sketch there somewhere, dying to get out!

Steve

@stevensfo

easy fix - move bank to one that doesn't charge

[GoSeigen]

All this talk of cards got me thinking.

Everyone knows how credit cards make money, and most young people, including myself many years ago, learned the hard way!

But how do debit cards make the banks money? You can only spend what you have and some banks even offer small sums for certain purchases. So, apart from the fact that they have your money to use, as with all current accounts, how are they making a profit via the debit card?


Steve

Our card processor takes about 2.5% of customer transaction value.

GS

[pje16]

Our card processor takes about 2.5% of customer transaction value.

GS

we use izettle
a bit cheaper
https://www.zettle.com/gb/pricing
very easy to setup and use
I've seen buskers in London using it

[didds]

Does he prefer that customers pay in cash? Most folks I know who work in hospitality like cash, especially wait staff.

a chum owns a brewery and two pubs. Hes gone totally cashless, because of

* the cost to bank cash
* suppliers don't want/wont take cash themselves
* time saved on cashing up is at least 30 minutes per day ie a saving of over 3 hours of staff pay
* no security issues over storing cash

The first two being the main drivers. Other industries/outlets etc will have different issues so this "model" doesn't fit every business of course. Another chum runs a corner store where cash is king he says, mainly because he is able to use cash to pay for supplies so isnt left with so much cash to actually bank.

didds

[pje16]

a chum owns a brewery and two pubs. Hes gone totally cashless, because of
didds

sadly, we have too many luddites, dinosaurs and fuds for that to happen fully