Navigating Transaction Fees:
Are you tired of transaction fees nibbling away at your budget every time you shop? You’re not alone. Many savvy shoppers are looking for ways to outsmart these extra charges and keep more money in their pockets.
Whether you’re buying online or in-store, using credit cards, debit cards, digital wallets or mobile payments, understanding how transaction fees work can be your first step towards smarter spending.
In this article, we’ll explore practical tips and strategies that help you minimize fees and maximize savings. Let’s dive into the essentials and turn you into a transaction fee-savvy shopper!
Can merchants charge credit card transaction fees?
When merchants accept card payments from customers, they have to pay processing fees, which is why you’ll notice that some shops have a minimum spending amount. Applicable fees include:
- Interchange Fees: Card issuers charge swipe fees set by the network (for example, Visa or Mastercard). These fees are a maximum of 0.2% for debit transactions and 0.3% for credit cards.
- Processing Fees: Payment processors and merchant services providers also charge fees to facilitate transactions. These usually don’t exceed 3.5%, but some fees can go up to 6%.
- Scheme Fees: These fees go to the credit card network and don’t usually exceed 1%. The more transactions a merchant accepts, the better their rates will be.
In the past, merchants often added extra to a sale to ensure the consumer paid their fees. However, in 2018, the European Union confirmed a ban on surcharge fees, meaning merchants can no longer charge customers for online and in-store card processing fees.
However, even though they can’t add charges to the transactions, you might still miss out on discounts, as more merchants offer discounts as incentives for cash payments ( Paysafe ).
Savvy shopper tip:
If you’re shopping in-store, ask the merchant if they offer discounts for cash payments. Some will take up to 10% off the retail price, saving you a lot of money and giving you access to more products.
Credit card interest fees
Credit cards are highly accessible and make it easy to fund large purchases when you don’t have available cash. However, making regular transactions and not paying the outstanding balance each month can expose you to hefty interest fees.
Your interest depends on your credit score and the issuer’s rates. In Europe, credit card interest rates typically start at 5.9% but can exceed 30% ( Deposits ).
As your balance increases, you’ll owe more interest, causing many shoppers to fall into a cycle of debt.
Savvy shopper tip:
Avoid making credit card transactions unless you need to. For example, going on a shopping spree and using your credit card means accumulating unnecessary debt, but saving the card for emergencies offers more protection.
Many people choose to order a virtual card online , which gives them more control over their spending. These cards have load limits, ensuring you can only use the available balance and avoid going into credit card debt.
Spending abroad
Visiting a new country is an exciting experience, but carrying cash isn’t always a good idea. For many travelers, card payments save a trip to the currency exchange and ensure they’re not exposing themselves to crime.
However, international debit and credit card fees can increase, with many issuers charging consumers for transactions. These fees typically range from 1% to 3%, depending on your issuer.
If you make a lot of purchases on your card, the total amount will add up, resulting in higher charges.
Savvy shopper tip:
Choose a card with low FX fees and be wary of the Dynamic Currency Conversion trap. DCC does have some advantages, but it also means you’ll pay extra costs, which makes international purchases more expensive.
ATM transaction fees
ATMs are ideal for cash purchases, but they also have some drawbacks. Most banking services offer free ATM transactions in Europe, but withdrawing money at a convenience store or ATM not linked to a bank can cost money.
While some ATMs charge a percentage of what you withdraw, others might have fixed fees. Depending on which ATM you use, these rates can be around €3.00.
The important thing to remember is that if your account balance is low, you might go into overdraft just by withdrawing money.
Savvy shopper tip:
Try to stick to bank ATMs or those found in supermarkets, as they don’t usually charge for transactions. If you’re visiting a new place, research the local area to find free ATMs or merchants that accept debit card payments.
PayPal transaction fees
Digital wallets like PayPal allow users to make purchases with one click rather than by entering their bank details. However, some come with associated fees you might not be aware of.
If you’re making domestic transactions, you won’t need to pay fees if you use a linked bank account or your available PayPal balance.
International transactions do come with transaction fees, including:
- Purchase Fees: If you buy products or services through an international country, PayPal might charge a percentage based on the transaction amount and a fixed fee.
- Conversion Rates: Shopping with a merchant outside your usual currency can incur fees. For example, if you live in Ireland and buy items from the US, you’ll pay fees.
- Credit Cards: It’s possible to link your credit card with PayPal, but the issuer might charge a fee.
Savvy shopper tip:
It might be best to use other payment methods if the fees are lower. Sometimes, you can pay in the merchant’s currency, which means that PayPal won’t issue conversion fees.
The bottom line
Transaction fees can trip any shopper up, but knowing what you might spend will make a significant difference to how much you save. Choosing options with the lowest fees makes it possible to enjoy the convenience of cash-free shopping.
Getsby Virtual Cards offer savvy shoppers unparalleled control over their finances. With no need to link your bank account, it’s easy to fund purchases and avoid unnecessary fees.
Whether you’re looking for a personal payment solution or want to provide employees, partners or customers with virtual gift cards, our prepaid options make it easy to spend in-store and online.
Please feel free to contact us if you’d like to learn more about our innovative virtual payment solutions.
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