Archive for the ‘Credit Cards’ Category

Some good signs on the financial front

Although they can be annoying, it does seem to be a good sign that the people trying to sell you credit cards are back in the shopping centres again and those annoying teatime calls trying to do the same have restarted too.

I imagine that there are all kinds of grand things that the economists are saying these days about when we should be starting to get out of this recession but I think the banks trying to push more credit onto us must be amongst the clearest and most easily understood sign of them all. Not only does that show that the banks have money to lend once more but it also shows that they’re at least prepared to consider lending it too. You might think I said the same thing twice in the last sentence but I didn’t. They always did have money to lend, what they wouldn’t do was actually lend it.

Moreover, this isn’t like them lending via mortgages (which also seems to have restarted, going by the number of “sold” signs going up lately). With a mortgage they have some security (ie they can take the house off you). With a credit card, they are taking a real risk that they could lose the money so overall it’s more encouraging to see people trying to sell you credit cards than it is to see more mortgages being approved.

Now, I’ll grant you that they are probably going to offer you a lower limit than you might have expected in the past, if they offer you a card at all that is. However, that they are trying to actively sell credit cards now seems a very clear sign that an upturn is on the way.

Copyright © 2004-2014 by Foreign Perspectives. All rights reserved.

Egg Money goes downhill after Citibanks changes kick in

The Egg Money card used to be one of the handiest cards that I had, despite the dopey hamster adverts.

You could use it as a savings account as it paid 4% (up until a few months ago) when you’d overpaid and indeed they encouraged you to do this. The original plan behind the card was that you’d use it essentially as a current account and therefore the credit limit was really an overdraft limit. Not only that but they paid 1% cash back on everything that you bought and even more if you bought from a small range of shops. Finally, because it was intended as a current account replacement, you could withdraw cash at no charge.

However, this year Citibank killed all that stone dead.

The 1% rebate remains, but now there’s no interest paid if you’re in credit, the limits remain pitifully small and it’s now 3% to lift cash. So it’s become an also-ran credit card. Sad to see such an innovative product killed but it’s worse that that as the security methods of Citibank are used too. Thus if you try to spend more than £200 or so in a single transaction the shop needs to call up for an authorisation number and if you use it more than twice in a single shop in a day then it’s blocked.

Unfortunately, it looks like I’m going to have to abandon this card as I had to with a previous Citibank card basically because of Tesco… today’s petrol, then the thank you card for James’ teacher, then the groceries mean it’s blocked, again.

Copyright © 2004-2014 by Foreign Perspectives. All rights reserved.

Accepting credit cards in a B&B

Amazingly many B&Bs still don’t accept credit cards and thereby end up losing business as many people prefer to pay directly with a card than to have to pay extra charges to lift cash abroad.

But, how do you do it?

Well, there are basically two ways that a B&B or self-catering complex can operate with a credit card.

  1. Accept cards solely for deposits; and
  2. Accept cards for all payments.

Naturally, it’s possible to start off just taking card payments for deposits and move onto accepting them for all payments. In fact, it’s useful to do exactly this to try out card payments for your business.

If you’re only taking card payments for deposits then you don’t need to sign up with a bank. The simplest way is to sign up with paypal for a business account. Payments received will cost you 3.4% plus 20p so if you take £10 will cost you about 54p (5.4%), £100 will cost £3.60 (3.6%) and £1000 will cost £34.20 (3.42%). These charges are similar to those that a small business would pay were they to do credit card processing via their bank in the UK but somewhat higher than the typical 0.75% for banks in France.

From these figures you’ll see that it’s best to use paypal for deposits. That way a typical 25% deposit will effectively cost you under 1% of the total bill for paypal processing.

You could use paypal to accept all payments this way but you would need your bookings to be paid 100% in advance to do that as you can’t easily use the paypal system to make on the spot payments (if you really have to you can do it by having the guest logging in using your Internet access and making the payment). So, if you want to accept all payments by card, then you need to get the little credit card machine although, in principle, you can run with PayPals virtual terminal option (£20/month) which gives you the equivalent of the little machine but using your computer to process the cards.

To get a credit card machine setup you need to have a business bank account and, in most cases, have had it for six months although for B&B and self-catering properties the bank will normally waive the six months requirement. In France, you’ll need to be registered and provide your KBIS.

Costs for this vary a lot. You can buy your own machine but they’re rather expensive (typically £300/£500) and therefore most people rent them from the bank (around £20/£30 per month). In most cases you’re better to opt for a fixed installation as the portable terminals can cost 50% more. Other things to consider are which cards you’ll accept. Normally Visa/Mastercard are sufficient (and will include Visa Electron and Maestro). American Express is becoming more popular but is usually more expensive than other cards. If you get a lot of Japanese then it’s probably worthwhile taking JCB. You can even accept various storecards but unless you’re in a shopping centre it’s probably not going to be worth the extra expense.

How do you do it? Open a business bank account then apply for the credit card facility at your bank.

One thing to watch is that you will need Customer Not Present enabled. This lets you charge cards without having the credit card in your hand. You’ll need this to take deposits.

Is it worthwhile doing though? Yes, it is. Sure it will cost you more but you can take that into account in your pricing. If you assume that a credit card payment will cost you 4% then adding as little as 2% to your prices will pay for it all in that not everyone will pay by card and many of those that do will use a debit card which’ll cost you less. So, if you’re charging £50/night that equates to adding £1 to your charges. Incidently, don’t try adding that £1 only to credit card customers as you’ll just end up driving them away.

Copyright © 2004-2014 by Foreign Perspectives. All rights reserved.

Cultural differences in the way people book a hotel

We received an interesting e-mail from one of the European offices looking after consumer affairs last night.

They’re writing on behalf of a Spanish couple who booked with us last July but who didn’t turn up.

Ordinarly, that would mean we’d have billed them as a no-show but at the time the booking system had a technical problem so we weren’t receiving their reservation e-mails and therefore didn’t know that they were coming. Anyway, net effect was that we didn’t charge them although under the terms of the reservation system we were entitled to.

They’ve gone to this European office with their booking confirmation that has a note of the two nights booked and EUR 98 charge. Except, that it isn’t a change: it’s just a note of what they would have to pay.

The Spanish guy in the European office doesn’t understand that at all. They quoted their credit card number and they’ve a statement with EUR 98 on it, they didn’t get their accommodation (because they went to the wrong place) but he believes that they’ve paid it as do they.

Usually the Spanish are much more Internet-savvy than the French but in this area they’re just as far behind in that they assume that they’ve paid when they quote a credit card number yet it’s only used for a guarantee.

I suspect that it’ll run for a bit as he sent another e-mail this morning threatening to translate everything and sent it to the French consumer protection authorities to demand the refund of this EUR 98 which they’ve not paid.

Copyright © 2004-2014 by Foreign Perspectives. All rights reserved.

A drift from Visa to Mastercard: holiday implications

There seems to be something of a drift from issuing Visa cards to issuing Mastercards in the UK at the moment thereby reversing the previous trend which was to only issue Visa cards.

Although it doesn’t really matter which you have in the UK, it can matter a lot when you go on holiday and generally it’s best to be carrying both Visa and Mastercard abroad. In that respect the switch of my Halifax Visa card to a Mastercard suits me as that gives me a Mastercard credit card from them and a Visa debit card but others could easily find themselves with a Maestro card and a Mastercard which isn’t a good combination as Maestro isn’t nearly as useful as Visa debit and you’re left with two cards on the same system which isn’t good either.

Not a catastrophe for sure but do make sure that you have both varieties of card handy well in advance of your next holiday.

Copyright © 2004-2014 by Foreign Perspectives. All rights reserved.
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