Foreign Perspectives

Archive for the ‘Banking’ Category

If you’re looking for a house in the UK at the moment, it’s pretty much the ideal time with lots of bargains around.

Usually to get a “bargain” you need to look for something well off the beaten track or needing some work done to it but at the moment that, for the most part, doesn’t apply. Whereas normally prices in the UK are usually firm, at the moment many people are open to negotiation so you’re quite likely to get an offer lower than the asking price accepted. Obviously not ridiculously low but you can probably start around 10% below the asking price.

Getting a mortgage is a different matter though as the criteria have been tightened up somewhat of late but if you’re able to bargain down the seller a little then the loan % should also go down and thereby make it easier for you to make that bargain purchase.

One thing that’s very noticeable in Valencia is that everywhere you see employment vacancy signs which implies quite a strong local economy.

As in other places in Spain there’s building work going on just about everywhere but it doesn’t seem so intrusive as it does in some cities (notably Madrid) with many quiet areas around the city. There’s more of a laid-back feel about the city too: everyone is certainly going somewhere yet they’re not going at the hectic pace you often see in Barcelona.

With the building work, there’s certainly money to be made in property speculation of course and the apartment we rented was owned by a relatively young Spaniard.

And the banks? It seemed like almost wall to wall banks in most of the central area of the city. Both more branches and a much wider variety of banks that I’ve seen anywhere outside London. They’re all competing for business too with many offers available on loans, credit cards and so on.

MBNA Europe seem to be in the process of an across the board increase in their interest rates to 34.9% in an effort to force their credit card customer base into taking secured loans with their affiliate company loans.co.uk at equally extortionate rates from 10.3% to 17.5% (vs more like 7% for a normal mortgage).

If they’ve hit you with this increase you don’t need to simply accept it as a fact of life though. Approach them in the right way and you can get the rate decreased.

First off don’t get angry, get even. To do this you need to remain calm and polite with them on the phone.

The number to call is 0800 783 1116 which is the direct number for their “Rates and Fees” department.

Ask why your rate has been increased and point out (if applicable) that you’ve managed your account with them well and not missed any payment. Their usual stock answer is that it was due to an “account review”.

At this point tell them that you do not feel that this represents a fair treatment, that the rate is punitive and that you’d like to make a formal complaint. It’s important to use wording along those lines as that will highlight to them that you’ll proceed further which, of course, they’d prefer you not to as they’d almost certainly lose a case that got as far as the Ombudsman.

Usually, they’ll have to consult their manager at this point and, all being well, will come back and confirm that your rate has been revised substantially downwards. Ask them to confirm this in writing.

If that doesn’t work, inform them that you propose to make a formal complaint to the Financial Ombudsman Service and ask them how you should first take up the complaint formally with MBNA (as required by the Ombudsman). Also, ask them how you should make a Subject Access Request with them (to get all the information that they hold about you) as you’ll need that for the Ombudsman.

Hopefully, that will be enough to shake some sense into them re your interest rate. If not, just carry on as you said you would and take it up first through the MBNA complaints proceedures and then through the Financial Ombudsman Service.

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 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.

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.

Many places tend to treat repeat customers specially through offering discounts, extra services, or whatever.

However, they remain customers and one of the key things about that is that you need to get money off them for whatever goods or services that you sell, even if they are both a repeat customer and a large one.

One trap to fall into is to be more lax with the payment terms. Unless you habitually offer credit then you shouldn’t offer it to even the best of customers as sooner or later it’ll just cause needless friction between you and a good customer. If it’s pay on delivery for everyone else then that should be the case for even the best customers too as your sales contract probably doesn’t allow for any credit in such circumstances: a recipe for trouble collecting the cash if ever there was one.

So, yes, offer better discounts to better customers. Yes, offer, additional services to better customers. But, NO, don’t change your payment terms.