Crackdown on the great credit card fees rip-off

 

Air fares, train tickets, concerts and car insurance will soon be cheaper as the Government cracks down on excessive credit card surcharges.

The hidden levy on goods and services bought by credit and debit cards, which can add £8 to the price of a plane ticket or 75p to the cost of cinema admission, is a recurring complaint among consumers. As anyone who buys holidays or concert tickets online will know to their cost, the surcharge is often only loaded on to the purchase price after customers have clicked through a succession of web payment pages.

Today the Government will announce steps to tackle the practice of adding a last-minute levy far above the actual cost to the retailer of processing a card payment, which can be as little as 10p.

Ministers will promise to stamp out surcharges that are "opaque, misleading and prevent consumers getting a good deal" by the end of next year.

Under the plans, "excessive surcharges" will be outlawed across the retail sector and retailers will be required to inform their customers in advance what extra charge they could face.

Mark Hoban, the Financial Secretary to the Treasury, said: "We want consumers to be able to shop around. They have a right to understand the charges they may incur up front and not be hit through a hidden last-minute payment surcharge."

He said Britain would become the first country to implement European Union legislation ending hidden surcharges. "The Government remains committed to helping consumers get a good deal in these difficult times," he said.

There will be fears that retailers may increase the cost of goods to make up for the lost fees, but ministers reply that the move will bring greater transparency to pricing and encourage competition. The plan comes after the consumer group Which? complained to the Office of Fair Trading (OFT) about the extra charges levied on transport, notably the cost of air travel.

Ryanair passengers face a £6 charge per person per flight for paying by debit or credit card, while easyJet charges £8 per booking and Flybe charges £4.50 per person per flight.

After an investigation, the OFT said it had uncovered considerable evidence of surcharging which it viewed as misleading. It called for hefty surcharges for processing debit cards to be outlawed. However, the Government will go further and announce that it supports the ban to be extended to all forms of card payment and for all retail sectors, including transport.

The OFT found that consumers who booked air tickets online in 2009 had to spend £300m on surcharges.

It remains unclear, however, how the new measures will affect a Ryanair scheme to drive customers into using only its own pre-payment card to avoid the £6 administration fee when booking tickets. The airline charges £6 to get the card and a further £2.50 fee if it is not used within six months. Further fees could build up if the account goes into overdraft through the application of the £2.50 charge.

The Treasury will publish a consultation document in the new year setting out its plans for tackling surcharges. The aim is for the rules to come into force by the end of next year – in time for Christmas 2012.

Richard Lloyd, the executive director of Which?, said he was delighted to see "an end to these unfair and excessive charges". He added: "The Government's decision to ban 'rip-off' debit and credit card surcharges is a huge victory for consumers. Given that airline passengers alone pay more than £265,000 a day in card surcharges, businesses shouldn't drag their feet. While the law will come into force at the end of 2012, we want companies to be up front and fair over their card charges today."

The Which? complaint was supported by more than 50,000 people. It argued that companies should be required to tell consumers in advance – including in ads – what they charge for handling debit and credit cards.

New European Union rules banning many businesses from imposing above-cost surcharges on card payments are due to come into force in mid-2014.

Credit card charges: The worst offenders

33 per cent: Ryanair and Easyjet

More than £10 per flight – up to 33 per cent of the total cost, if you book early enough and get the lowest fees.

10 per cent: Odeon Cinemas

The firm charges 75p a ticket for online credit card bookings – nearly 10 per cent on some purchases.

£50: Thomas Cook

Up to 2.5 per cent extra for users using their own credit cards. Charges can be up to £50 on its most exotic destinations.

£36: Swinton Car Insurance

Charges are 2.5 per cent for credit card payments – thus for a £550 premium, an extra £36 is added.

Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Recruitment Genius: Customer Service Administrator

    £13000 - £15000 per annum: Recruitment Genius: Are you passionate about custom...

    Recruitment Genius: Dialler Administrator

    £22000 - £25000 per annum: Recruitment Genius: Main purpose: Under the directi...

    Ashdown Group: Contracts Manager - City of London

    £35000 - £37000 per annum + benefits : Ashdown Group: Contracts Manager - City...

    Guru Careers: Tax Manager / Accountant

    £35 - £50k DOE: Guru Careers: A Tax Manager / Accountant (ACA / CA / CTA) is n...

    Day In a Page

    Blairites be warned, this could be the moment Labour turns into Syriza

    Andrew Grice: Inside Westminster

    Blairites be warned, this could be the moment Labour turns into Syriza
    HMS Victory: The mystery of Britain's worst naval disaster is finally solved - 271 years later

    The mystery of Britain's worst naval disaster is finally solved - 271 years later

    Exclusive: David Keys reveals the research that finally explains why HMS Victory went down with the loss of 1,100 lives
    Survivors of the Nagasaki atomic bomb attack: Japan must not abandon its post-war pacifism

    'I saw people so injured you couldn't tell if they were dead or alive'

    Nagasaki survivors on why Japan must not abandon its post-war pacifism
    Jon Stewart: The voice of Democrats who felt Obama had failed to deliver on his 'Yes We Can' slogan, and the voter he tried hardest to keep onside

    The voter Obama tried hardest to keep onside

    Outgoing The Daily Show host, Jon Stewart, became the voice of Democrats who felt the President had failed to deliver on his ‘Yes We Can’ slogan. Tim Walker charts the ups and downs of their 10-year relationship on screen
    RuPaul interview: The drag star on being inspired by Bowie, never fitting in, and saying the first thing that comes into your head

    RuPaul interview

    The drag star on being inspired by Bowie, never fitting in, and saying the first thing that comes into your head
    Secrets of comedy couples: What's it like when both you and your partner are stand-ups?

    Secrets of comedy couples

    What's it like when both you and your partner are stand-ups?
    Satya Nadella: As Windows 10 is launched can he return Microsoft to its former glory?

    Satya Nadella: The man to clean up for Windows?

    While Microsoft's founders spend their billions, the once-invincible tech company's new boss is trying to save it
    The best swimwear for men: From trunks to shorts, make a splash this summer

    The best swimwear for men

    From trunks to shorts, make a splash this summer
    Mark Hix recipes: Our chef tries his hand at a spot of summer foraging

    Mark Hix goes summer foraging

     A dinner party doesn't have to mean a trip to the supermarket
    Ashes 2015: With an audacious flourish, home hero Ian Bell ends all debate

    With an audacious flourish, the home hero ends all debate

    Ian Bell advances to Trent Bridge next week almost as undroppable as Alastair Cook and Joe Root, a cornerstone of England's new thinking, says Kevin Garside
    Aaron Ramsey interview: Wales midfielder determined to be centre of attention for Arsenal this season

    Aaron Ramsey interview

    Wales midfielder determined to be centre of attention for Arsenal this season
    Community Shield: Arsene Wenger needs to strike first blow in rivalry with Jose Mourinho

    Community Shield gives Wenger chance to strike first blow in rivalry with Mourinho

    As long as the Arsenal manager's run of games without a win over his Chelsea counterpart continues it will continue to dominate the narrative around the two men
    The unlikely rise of AFC Bournemouth - and what it says about English life

    Unlikely rise of AFC Bournemouth

    Bournemouth’s elevation to football’s top tier is one of the most improbable of recent times. But it’s illustrative of deeper and wider changes in English life
    A Very British Coup, part two: New novel in pipeline as Jeremy Corbyn's rise inspires sequel

    A Very British Coup, part two

    New novel in pipeline as Jeremy Corbyn's rise inspires sequel
    Philae lander data show comets could have brought 'building blocks of life' to Earth

    Philae lander data show comets could have brought 'building blocks of life' to Earth

    Icy dust layer holds organic compounds similar to those found in living organisms