Watchdog group challenges card surcharges


Excessive credit card surcharges could soon be a thing of the past, if a new campaign succeeds. Consumer watchdog group Which? is launching a super-complaint against the surcharges, which are sometimes imposed when customers choose to pay by debit or credit card. The group is asking the Office of Fair Trading (OFT) to consider whether these surcharges are fair. If the super-complaint is upheld, it could become less expensive for Britons to use their credit cards with certain companies.

merchant-account-swipe Which? says companies are using excessive surcharges to boost profits
According to Which?, offenders include low-cost airlines and some local authorities, estate agents and cinemas. One example is Ryanair, which charges a fee per passenger, per leg of their journey. Which? pointed out that a family of four booking return flights with the airline would pay a £40 surcharge. Yet it only costs around 20p for the airline to process a debit card transaction and a maximum of 2% of the transaction value for credit card payments.

Which? chief executive Peter Vicary-Smith said there is "no justification" for excessive debit and credit card surcharges. He pointed out: "Paying by card should cost the consumer the same amount that it costs the retailer. Companies shouldn't be using card processing costs as an excuse for boosting their profits."

Consumer groups and retailers respond
Prashant Vaze, head of fair markets at Consumer Focus, agreed that the OFT should take action against companies that impose unfair credit card surcharges. He argued: "For far too long firms have made a quick buck through confusing and unfair card charges, which bear no relationship to the costs levied by payment agencies."

The UK Cards Association has also given its support to the campaign, but the British Retail Consortium insisted that while the watchdog was right to draw attention to the issue, it was wrong to blame retailers. Director general Stephen Robertson said: "I can't speak for budget airlines, but retailers are actually protecting card-using customers from the banks' excessive charges on them." Mr Robertson revealed that the banks' charges for processing a credit card transaction are typically 15 times higher than for cash. He added: "We've been engaged in a longstanding campaign and legal action to bring those fees down to levels that reflect the actual, very low costs of processing transactions."

See related:Plastic card transaction fees stir debate; Retailers fined for missing card protection checks;Britons relying on credit cards for daily spend

Published: 17 February 2011