The Ombudsman for the Credit Institutions, Mr Gerry Murphy, has found in favour of a shop-owner in a decision likely to have implications for most traders who accept credit card payments.
It is also likely to have implications for all the main banks.
The shop-owner objected to charges which were being allocated against him by the Bank of Ireland when funds collected by the bank from customers who used credit cards, were being lodged to his Bank of Ireland business account.
Mr Murphy recommended that the bank cease making the charges, return all money taken in charges to date, and make a payment of £500 to the trader by way of compensation.
Mr John Doupe, of Sue-D-Knits Ltd, Kenmare, Co Kerry and the Bank of Ireland have one month in which they may appeal the decision. It is understood the bank is seeking legal advice and may choose to appeal.
Mr Doupe is unhappy with the £500 payment. "I feel that the amount of time I had to allocate to fighting this is worth more than £500," said Mr Doupe.
He argued that the fees were being charged for what were essentially internal transfers of money within the bank. The money was going from the Credit Card Services division of the Bank of Ireland to his account in the Kenmare branch of the Bank of Ireland.
The transactions were for the bank's benefit in order for it to clear its debts, and obviated it having to issue cheques or cash, Mr Doupe said. It was unfair that he should have to pay a charge in such circumstances.
The bank said the charge applied was an electronic funds transfer charge for lodging into the trader's bank account. Mr Doupe had a contract with the bank whereby credit card payments were processed and collected by Credit Card Services (a division of the Bank of Ireland). A discount was taken by the bank and the remaining money was then lodged to Mr Doupe's business account, at which point a fee of 19p per transaction was charged.
The ombudsman asked the bank why, if the monies paid were due in discharge of debts owed by the bank, did the charges not fall to the bank rather than Mr Doupe.
"The payments made into the complainant's bank account are monies collected on behalf of the complainant by Credit Card Services," the ombudsman said in his report.
Once a valid credit card transaction was made, the bank owed a debt to the complainant (Mr Doupe), Mr Murphy said.
The discharge of that debt was on the same basis as that on which the bank paid a supplier. Nothing said to him in evidence would entitle the bank to make a charge in respect of the payment.
"It follows therefore that, in my considered opinion, transaction charges should not be made against the complainant's account in respect of future discharges by the bank," Mr Murphy said.
It is likely the decision, if unchanged, will have implications for all the main banks, most of which have a credit card services division like that of Bank of Ireland.
As long as the trader has his or her bank account with the bank which is collecting the credit card payments, the ombudsman's decision would seem to apply. Most traders are likely to have their credit card contract with the bank they use.
In most contracts with banks, traders decide how often (daily, weekly, etc) a "batch" of credit card payments are processed and transferred to the trader's account.
