Government stalls on banning ‘rip-off’ credit and debit card surcharges

Consumers continue to pay extortionate debit and credit card surcharges and airlines, ferry companies and Government bodies are cashing-in, as Ministers drag their feet on banning card surcharges by the end of the year.

In December last year the Government announced it would ban excessive card surcharges by December 2012. Since then nothing has happened and today the Financial Secretary to the Treasury, Mark Hoban MP, said the Government was committed to banning excessive surcharges but did not confirm that it was sticking to its promise to bring in the ban by the end of 2012.

The charges continue one year on from the Office of Fair Trading’s decision to uphold a super-complaint by Which? on card surcharges. At the time, the OFT committed to taking enforcement action against companies that persist in hiding the cost of paying by card, but has yet to do so.

While the Government stalls, consumers are still paying the price with many major airlines continuing to impose heavy fees. All of the 13 airlines we investigated still apply card surcharges and Monarch has increased its charges in the last six months for some customers. Monarch now adds a £5 fee or 4% charge for credit card payments (whichever is highest). That means a family of four spending £2,000 on return tickets this summer has to pay an extra £80 in card surcharges.

Which? has investigated other businesses and has found that the DVLA, a Government agency, also continues to charge £2.50 for paying by credit cards. Other travel businesses imposing the fees include Irish Ferries, P&O, Stena Line, Eurostar and The Trainline.

Which? executive director Richard Lloyd said:
“The Government must take urgent action if it is to meet its promise to consumers to ban excessive card surcharges by the end of 2012. Over 50,000 people supported Which?’s campaign to end rip off surcharges. At a time when so many people’s budgets are stretched, it’s unacceptable for the Government to be stalling on this issue.

“The OFT should also be cracking down on businesses to stop the rip-off. It’s outrageous that so many are cashing in on surcharges while they still can.”

Which? wants charges for using a debit or credit card to be fair and transparent, and proportionate to the costs that businesses pay for processing the payment – approximately 20p for a debit card. We also want to see all charges included in the headline price so that it is easier for consumers to shop around and compare prices.

Whilst surcharges are most common in the travel industry, we have also found examples in many other services that people use on a day-to-day basis, including energy companies, dentists and even funeral directors.

The UK is now one of the few European countries that still allows surcharges.
Notes to Editor
1. The OFT estimate that airline passengers spend £300m a year in card surcharges.

2. In June 2011 the OFT upheld Which?’s super-complaint into surcharges, agreeing that they cause a significant problem to consumers. They recommended that businesses make payment charges transparent and include the cost of debit card payments in the headline price.

3. Following our successful lobbying last year, in December 2011 Which? secured commitment from the Government to ban excessive surcharges by December 2012. Throughout 2012 Which? has been pressing the Government for details on when its consultation on the ban will be released.

4. Which? looked again at all of the airlines we investigated six months ago when the Government announced it was banning surcharges. All of the 13 air carriers we investigated, that are still offering flights, still apply surcharges for using a debit and/or credit card (BMIBaby has stopped offering flights to many destinations and will cease all operations in September 2012).

5. As of April 2012 three quarters of Monarch Airline’s passengers who pay by credit card are being hit by higher surcharges after the budget airline changed the way it calculates fees

6. Irish Ferries charges £5 for debit /credit card purchase
Stena Line charges £5 for credit card purchases
Eurostar charges £4 for credit card purchases over £30
P&O charges £4 for credit card purchases
The Trainline charges £3.50 for credit card purchases
DVLA charges £2.50 for credit card purchases

7. Visit stop ‘rip off’ charges for more information on our campaign.

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