Crazy_Fool - 12:04 am on Jan 22, 2003 (gmt 0)

>>£4.50+VAT=£5.29 processing charges
>>£10+VAT=£11.75 admin charge for chargeback
>>possible £50 customer charge on their card that they are
>>not covered for

>>£100 is valid. WorldPay make £5.29 profit.
>>£100 is fraud. WorldPay make £17.04 minimum, £67.04
>>maximum profit.

none of this is fair or accurate - it's highly misleading to say the least.

the processing (transaction) charges are applied only when transactions are completed (automatically with full-auth or manually with pre-auth). merchants have the option to use pre-auth and reject / ignore fraudulent orders without incurring any transaction fees whatsoever.

if the merchant authorises a transaction that is later charged back, it's entirely the merchants responsibility.

of the £5.29 transaction fee, £0.79 is VAT which goes to HM Customs. WorldPay actually get 1.6% which is £1.60 - the remaining £2.90 goes to the banks and card companies etc for their part in the processing. a substantial proportion of the £1.60 will be spent on worldpay's own costs - staff etc. the profit will be tiny.

of the £11.75 chargeback fee, £1.75 is VAT and goes to HM Customs. the remaining £10 will go towards the admin costs involved in sending you the RFI, answering your queries about the transaction and the chargeback, collecting your RFI response and sending it to the card issuer and so on. don't forget the national minimum wage is £4.20(?) per hour. at best, the £10 charge will only just cover costs.

other online payment processors also have chargeback fees. rates vary, but again, a lot of admin time is spent dealing with them. i doubt very much whether any online processing company makes a penny profit from chargebacks / fraud.

as for the (possible) £50 cardholder liability, this will be charged by the card issuer, not the payment processor. i think the amount and the circumstances in which the fee will be charged will differ between card issuers. i think the actual amount is set (or suggested) by the underwriters for the card issuers. again, nobody can profit from it - the card holder pays the first £50 of any claim, and the card issuer (or their insurer / underwriter) pays the rest. it's a bit like the excess on your car insurance.