Consumers still being hit with rip-off card charges

The ban makes it illegal for companies to charge more than what it costs them to process the payment. Picture: Julie Howden
The ban makes it illegal for companies to charge more than what it costs them to process the payment. Picture: Julie Howden
Share this article
Have your say

CUSTOMERS are still being charged double-digit commissions on online card transactions six months after a government ban on excessive credit and debit card surcharges came into force, a report has found.

Consumer watchdog Which? found that Spanish travel firm EDreams imposes a surcharge of more than 18 per cent on some transactions, while easyBus and airlines Vueling, Monarch and Jet2 still charge “over the odds” with fees ranging from 2.5 per cent to 3.5 per cent for credit card payments.

The ban makes it illegal for companies to charge more than what it costs them to process the payment, which Which? believes should be no more than 2 per cent for credit cards – or just 20p for debit cards.

Consumer minister Jo Swinson said she would write to all of the enforcement agencies involved, such as the Civil Aviation Authority and the Office of Fair Trading (OFT), to remind them of their “obligations” to enforce the rules.

In June last year, the OFT responded to a super-complaint from Which? and warned the airline industry to change practices or risk enforcement action. It recently estimated that consumers spent about £300 million on payment surcharges in 2010 in the airline sector alone, before the ban came into force.

Ahead of the change in legislation, a number of airlines last year agreed to cut credit and debit card charges following a campaign by consumer groups, but the new law, which came into effect in April, saw all companies banned from imposing fees of more than a few pence.

“It’s disappointing that six months after the government banned rip-off surcharges, consumers are still being hit with high fees simply for paying with a card,” said Which? executive director Richard Lloyd.

Following complaints from consumers, the watchdog also contacted First Choice, Thomson, easyJet and Mytrainticket – all of which had charges of around 2.5 per cent and which all subsequently agreed to ­reduce their credit card fees to 2 per cent. Vehicle hire firm easyCar has gone even further and have now abolished all their fees for credit and debit cards.

However, airline Germanwings still charges customers an £8 flat fee when paying by credit or debit card, according to the Which? investigation.

“While some companies have reduced their surcharges, there should be a crackdown on rogue companies who continue to flout the ban,” added Lloyd. “We’ll be passing on our findings to Trading Standards and asking them to enforce the rules.”

Swinson said “enforcement” agencies have the power to take action against companies which flaunt the rules.

“We know it can often be a nasty surprise when consumers see an advertised price and then have an excessive payment surcharge added at the end,” she said. “This is why we brought in measures – a year earlier than required by European law – to make sure that UK consumers benefit from clearer and fairer prices.

Sir Stelios Haji-Ioannou, chairman of easyGroup, which owns both the easyBus and easyCar brands, said that easyBus currently charges 50p per debit or credit card transaction compared with an approximate cost of 35p.

“This report is clearly misguided,” he said. “As a low-value transaction transport operator, easyBus faces special issues on how to interpret the proposed charge ceilings. Which? clearly needs to rethink its ‘raison d’etre’. Which? should be focusing on the real rip offs in the travel/airline industry, not easyBus.”

A spokeswoman for said: “Last year we made all bookings using a debit card free, and we feel the 2.5 per cent surcharge is a fair reflection of our own costs.”

A spokeswoman for Monarch Airlines said: “Monarch Airlines reduced the charge paid by passengers booking by credit card from 4.5 per cent to 2.5 per cent on 13 December 2012.

“The airline is satisfied that this 2.5 per cent charge represents only a proportion of the actual cost involved in taking payment by credit card and therefore complies with The Consumer Rights (Payment Surcharges) Regulations 2012.”