Firms face crackdown on credit card surcharges after watchdog probe

The consumer watchdog warned that the practice of imposing additional charges on card users at the point of payment - initially adopted by budget airlines - had spread to other types of business, including hotels and cinemas and even vehicle licensing body the DVLA.

But Which? claims the low-cost carriers remain among the worst offenders, with some charging a fee per passenger per leg of the journey, in spite of them having to process just one transaction.

A family of four booking a return flight with Ryanair would be charged 40 to pay by card - while the cost to the airline would be around 20p to process a debit card payment and no more than 2 per cent of the transaction value for a credit card.

Flybe's charges are almost as high, at 36 for the same family - while Easyjet would only charge them 5.50 for paying for return flights by card.

"There's simply no justification for excessive card charges - paying by card should cost the consumer the same amount that it costs the retailer," said Peter Vicary-Smith, chief executive of Which?. "Companies shouldn't be using card processing costs as an excuse for boosting their profits."

He added: "Low-cost airlines are some of the worst offenders when it comes to excessive card surcharges, but this murky practice is becoming ever more widespread, from cinemas to hotels and even some local authorities."

Janice Hogarth, secretary of the Scottish Passenger Agents' Association, said companies should be more upfront.

"If it is going to cost 139 in total, they should say that that is what the consumer wants," she said. "It is better than advertising a flight for 60 - and then finding it has more than doubled after tax, bag and card charges.

"What you have got to remember is that, especially in the case of budget airlines, the amount you are paying is still cheap, but this practice is definitely on the increase."

The issue will now be investigated by the OFT, which will publish a report on how the problem should be addressed.

The last time Which? issued a "super complaint" was in 2007, when it took the Scottish legal system to task for restricting choice to consumers and preventing the formation of alternative business structures.

The recommendation made by the OFT resulted in the Legal Services Act Scotland, which came into force last year and reformed regulations over the ownership of law firms.

Other issues put forward by the eight bodies allowed to make "super-complaints" include restrictions on beer supply in pubs and the time

taken for cash ISAs to be transferred. The process, fast-tracked by the OFT, needs to deal with an overall market issue that affects consumers.

TAKE ACTION

Avoid online or telephone bookings. Which? says many firms, including cinema operators Vue and Odeon, will not impose card fees on people who pay in person.

If you are using your credit card because you want to get "section 75" protection on a purchase - insurance in case the company goes bust, valid on any credit card purchase over 100 - you could pay with your card for a proportion, and the rest in cash. You would still be entitled to cover on your whole purchase, without incurring the percentage fee on the entire amount.