CC companies can add a special fee or something to it if they want to like with forex?
Interesting question.
Visa/Mastercard/Amex certainly could (as Amex demonstrated recently, in fact) by increasing their government merchant fees (or creating a special fee category for ATO I guess), but it may also be "difficult" for them - e.g. they may have long-term contracts with the government covering such things.
On the card issuer side, I really don't know. I don't see any technical reason they couldn't, but they may also be barred from doing so due to Visa/MC/Amex rules.
But, what I meant was renegotiate the fee arrangement with the ATO. The ATO does not set the surcharge the banks charge simple what the payer has passed on to them.
At present there is a special "government bodies" category in both Visa and Mastercard's merchant fee schedules (0.33% fee, IIRC), so to do so, at least for Visa/MC, would mean changing their merchant fee for all government bodies or creating a special merchant fee category just for the ATO.
If anyone is interested, the aforementioned merchant fee schedules are on the public record (available on Visa / MC websites respectively) - Google it. They list all the different categories and amounts of merchant fees, right from ones for specific types of merchant (e.g. government, education, charities) up to ones for different types of cards for normal businesses (e.g. standard vs premium (e.g. Platinum) vs super-premium (e.g. Signature / World / Infinite)).
He said that they were "haemorrhaging" money. (They still have to buy the points from Q )
This topic has been discussed extensively earlier in this thread, several times. Others have different opinions, but what you were told doesn't surprise me at all given the total merchant fee for ATO on Visa/MC is only 0.33% (as mentioned above) - and Visa/MC have to take their cut too. Do remember that there are other factors involved too, though, which could make a "loss" on ATO spend worthwhile sometimes (e.g. other revenue streams from a customer that make a customer profitable overall).
That aside, and on a slightly different topic: I hate to be Mr Negative, but my personal prediction is that Visa and Mastercards that earn points from ATO transactions will slowly dry up over the next 12 months to the point of non-existence, except perhaps the Visa/MCs that come as a companion to some Amex cards (e.g. big 4 bank offerings) - there is simply no way that it can be anything except a huge loss maker with the tiny 0.33% merchant fee.
I think Amex cards that earn points from ATO have a reasonable chance of hanging around though, as a 1.45% (minus whatever margin Amex takes, which I assume is relatively slim) merchant fee leaves a lot more "fat" in it for the card issuer. It may not be enough to make the transactions profitable on a 1.5ppd card, but it at least greatly reduces the loss (and hence increases the chance that the customer is worth keeping overall).
So, I guess, this is a word of warning, especially for those aiming to maximise their points on, for eg, Wow EDR. If you put ALL your ATO onto it, and very little of your regular spend on it, then you will get 3 months of points, then ruin it for EVERYONE.
This doesn't really make much sense, unless you are a big spender on things other than ATO on any given card (or ATO amounts are small). e.g. if ATO is
that unprofitable, if someone spends $50k of ATO + $5k of other in a month, the "profit" from $5k of other isn't likely to make up for the "loss" $50k of ATO.
I imagine the thing that annoys them THE MOST is people abusing the system, by paying their CC into credit, then 'buying' much more than they can afford (according to their credit limit) . I suspect, that if people only spent at the ATO within their credit limit and used the cards for other purchases too, then it wouldn't be such a problem.
If you want to maximise your points, how about upping your credit limit........?
And this makes less sense.
Ignoring any bigger picture questions about whether skirting the edges of T&Cs to put ATO spend through CCs and earn points is "abusing" the system, and addressing just what you said:
- I can't see any logical reason why the simple act of putting a card into credit for an ATO payment is "abuse", and,
- more importantly, this scenario would actually cost the card issuer
less than the same customer upping their credit limit, as they're lending the customer less money (that they have to in turn borrow, and pay interest on). This is assuming the balance is paid in full before the due date (so the customer pays no interest to the card issuer), but this would be the case a vast, vast majority of the time when it comes to ATO spend.
Are you sure? If so, why would any credit card company award points for any ATO transaction?
Could be any of a number of things: ignorance (to the problem), inertia (a big problem in many large organisations like banks), don't want to lose customer(s) who are profitable in totality even if the ATO spend is a loss, etc.
Okay, so my partner received the dreaded WOW cut-up-your card letter today. I obviously pushed it too hard, despite all the warnings on this thread
Like others, I'd love to know how much spend and how regularly, if you don't mind sharing. Thanks.
