The great credit-card crunch... or why firms squeeze us for extra fees
Sunday 01 March 2009
As the recession bites, retailers, airlines, entertainment firms and even government departments are increasingly imposing fees on consumers when they use their credit or debit cards to pay for goods and services.
Businesses have to pay fees between 0.7 and 1 per cent to provide Visa or Mastercard facilities to their customers. But firms are adding on further charges, seemingly to boost their profits.
Some of the most common booking fees are those charged when you buy tickets online or by phone. There are charges when buying tickets for plays, films and even ice-skating. Charges for more expensive tickets can be higher: those off to Glastonbury will have paid a minimum £5 booking fee. Online booking agents such as Ticketmaster and Seetickets routinely add on card-handling or order-processing fees. These cover the cost to the card firm, call-centre overheads, and website technology. Martin Fitzgerald of Seetickets says: "It's not so much a charge for using your card; it's a charge for the service we provide to enable you to buy the ticket."
Some of the highest card fees are in the airline sector. EasyJet, Ryanair and Flybe, among others, add several pounds to bookings paid by credit or debit cards. Jemma Smith from the UK Payments Association (Apacs) says: "The amount an airline is charged by the bank for a card facility is likely to be pence. They are passing on that cost, but others too, like their internal administration, and protection from fraudulent transactions. The problem is that the fees aren't transparent. As a customer, you just want to know – why?"
Even the DVLA will charge you a £2.50 flat fee for vehicle tax and licensing payments, BT charges £1.50 per month if you pay your phone bills by card, and you'll be hit on a bit of home decoration at Ikea, too, as it charges a 70p handling fee on all credit-card transactions. David Kuo of financial website The Motley Fool (Fool.co.uk) says: "It is outrageous that banks charge pennies for handling card transactions yet retailers bump the fee up to pounds. But the harsh reality is that when the tills aren't ringing loudly then shopkeepers have to use other tactics to increase revenues. The easiest way is to sting unsuspecting customers."
So how do you get out of paying the charges? When buying tickets, your only option – though not always a practical one – is to go to the box office in person. Opting for direct-debit payment can dodge fees, and using debit instead of credit cards usually reduces, if not avoids, charges. This is true for airlines, where debit-card charges are sometimes lower and using a Visa Electron can eliminate extra costs. But avoiding handling fees completely is becoming much more difficult.
Independent Partners: See how much you could save by switching credit cards. Compare now
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