An example of how a UK bank charged +10.6% more from the balance than the merchant received. (We asked the cardholder if this is the same as the previous record holder, HSBC). As a comparison, advertised card fee is now 2% (used to be 2.5% at the time of this transaction).
- 444.53 GBP was charged. - 2009-05-12
- Merchant received 401.8 GBP available for spending on 2009-05-28 ( 131784 HUF, 1 GBP = 327,98 HUF).
When one pays with card internationally, it happens the following way (see WebShop/CardTransactions for more details):
- using a gateway they contact their cardholder's bank via the visa/mastercard criminal network to authorize the payment.
- The cardholder's bank authorizes the payment (if they are lucky) and charges an amount from the cardholder's balance. The final amount charged is completely out of control of the merchant. There is no way to tell in advance how much the cardholder bank will charge.
- this is different in POS domestic sales where the fraudulent "electronic payment" network has a good competitor: paper cash - in international payments competition is - yet - illusoric
- Visa settlement happens in USD (never GBP). The bank does not advertise to the cardholder the exchange rates they will use.
- and the merchant does not know what is the cardholder bank anyway, even from the card number this would be infeasible to find out automatically (but the merchant does not know the cardnumber anyway with this system - at least that part is good).
And finally, the merchant sometimes gets some part of the settlement amount.
The visa/mastercard criminal network paid about 50000 USD less in 2009 Q4 (it's just to our small business) than they charged from cardholders.
And on the top of that, there is basically noone to sue, because they work via proxies (merchants don't contract with Visa/Mastercard, the gateway is a different legal entity).
With all the small-letter text the visa/mastercard processing gateway is not responsible for totally fucking up the transactions (eg. not completing the settlement
for sales type transactions - while the charge is already gone from the cardholder - not available for spending).
How smart is the legal system to protect fraud committed via proxy-method like that ?