4 ms·

It's also the reason why credit card benefits are worse in Europe, as I believe there are restrictions on what the card companies can charge for transaction fee

It's also the reason why credit card benefits are worse in Europe, as I believe there are restrictions on what the card companies can charge for transaction fees.

tialaramex 7y ago
Here's a typical case: https://ec.europa.eu/commission/presscorner/detail/en/IP_19_2311 https://ec.europa.eu/commission/presscorner/detail/en/IP_19_... In this example the fees capped were for outsiders who are buying things in the EEA. e.g. an American buying something from an Italian vineyard or an Australian buying some authentic British tableware (for now). The EU also forbids hidden fees for most types of transaction. It wants the advertised price to match the price paid by consumers‡. If I have 25 EUR in my pocket and you advertise a product for 25 EUR I should be able to get that product. Whereas in the US if you see a product advertised for $25 you know they'll want maybe $30 or more as they add fees, taxes and charges on top of the supposed price. As a consequence this means the fee for a card ends up built in to most online prices in Europe, even if you actually transact in some other way that reduces or eliminates the fee for the seller. So ensuring the fee is low makes good sense here too. ‡ British supermarkets (used to?) use a trick to reduce taxes here - they charge you a fee for their backend card processing, but they subtract that fee from your checkout price. The cost to you doesn't change, and you'd never notice unless you read the small print, but they've successfully argued that this service fee should be taxed differently than your purchases, saving them money. Since it doesn't affect the headline price versus price paid the EU doesn't care.
- rahimnathwani 7y ago
  How would the supermarket save money by charging a separate service fee? Many of the items sold in supermarkets (e.g. bread and milk) aren't subject to VAT, whereas (almost) all services attract VAT at 20%
  - ValentineC 7y ago
    I'm guessing it has something to do with claiming the VAT on processing fees as input tax: https://www.gov.uk/guidance/vat-guide-notice-700#section4 https://www.gov.uk/guidance/vat-guide-notice-700#section4
tomp 7y ago
That's not true. The restrictions only came into force a few years ago. The benefits were never there (or at least much shittier - some banks even charge for credit cards!) in the first place.

It's also the reason why credit card benefits are worse in Europe, as I believe there are restrictions on what the card companies can charge for transaction fees.

tialaramex 7y ago

Here's a typical case: https://ec.europa.eu/commission/presscorner/detail/en/IP_19_2311 https://ec.europa.eu/commission/presscorner/detail/en/IP_19_... In this example the fees capped were for outsiders who are buying things in the EEA. e.g. an American buying something from an Italian vineyard or an Australian buying some authentic British tableware (for now). The EU also forbids hidden fees for most types of transaction. It wants the advertised price to match the price paid by consumers‡. If I have 25 EUR in my pocket and you advertise a product for 25 EUR I should be able to get that product. Whereas in the US if you see a product advertised for $25 you know they'll want maybe $30 or more as they add fees, taxes and charges on top of the supposed price. As a consequence this means the fee for a card ends up built in to most online prices in Europe, even if you actually transact in some other way that reduces or eliminates the fee for the seller. So ensuring the fee is low makes good sense here too. ‡ British supermarkets (used to?) use a trick to reduce taxes here - they charge you a fee for their backend card processing, but they subtract that fee from your checkout price. The cost to you doesn't change, and you'd never notice unless you read the small print, but they've successfully argued that this service fee should be taxed differently than your purchases, saving them money. Since it doesn't affect the headline price versus price paid the EU doesn't care.

rahimnathwani 7y ago
How would the supermarket save money by charging a separate service fee? Many of the items sold in supermarkets (e.g. bread and milk) aren't subject to VAT, whereas (almost) all services attract VAT at 20%
- ValentineC 7y ago
  I'm guessing it has something to do with claiming the VAT on processing fees as input tax: https://www.gov.uk/guidance/vat-guide-notice-700#section4 https://www.gov.uk/guidance/vat-guide-notice-700#section4

tomp 7y ago

That's not true. The restrictions only came into force a few years ago. The benefits were never there (or at least much shittier - some banks even charge for credit cards!) in the first place.