Debit card surcharges 'must be banned'

Handing over card

Consumer champion Which? has stepped up its campaign against card surcharges, calling for a change to the law that would ban debit card charges.

Consumers are collectively paying more than £265,000 a day in debit card surcharges to airlines, even though a simple law change could outlaw them, says Which?.

Since 28 June, when the Office of Fair Trading (OFT) announced card surcharges were unfair, Which? estimates that customers have paid £18 million in airline surcharges.

This is in spite of a Which? super complaint against the practice in March and the OFT calling for such charges to be banned.

A call for action

Executive director of Which? Richard Lloyd is calling for action: "With most airlines yet to drop these card surcharges and some introducing new fees, it’s time for the government to put a stop to this.

"A minor change to the law is all it would take to ban the charges on debit cards that you only find out about at the end of a lengthy online booking process."

Amending article 52 (3) of the Payment Services Regulation would only allow credit card surcharges if they meet OFT guidelines and would see an end to debit card surcharges. Vendors would also have to be much clearer to consumers about fees and charges.

Which? is urging consumers to email financial secretary to the Treasury Mark Hoban to ask the government to step in and take firm action.

"Thousands of people have complained to Which? that these hidden card fees are unfair. The government must act so that consumers can easily compare the cost of their flights," says Lloyd.

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Card surcharges Q&A

What are card surcharges?

These are fees levied by organisations on customers for paying by card. Online retailers –and the travel industry in particular – often charge these fees under the pretext that it costs them to process card bookings.

Individual companies charge different rates, although they tend to be around the £4 mark. However, critics argue the cost of processing a card payment is substantially less than the fees consumers have to pay.

How do companies get away with charging them?

Customers of budget airlines Easyjet and Ryanair no longer pay card surcharges, they pay a ‘booking fee’ instead. So language is one way round it. Companies also argue that customers don’t have to pay the card fees if they choose an alternative payment method.

So how can I avoid the fees?

If you still have an Electron card use it as most vendors don’t tend to charge for paying with them. Getting your hands on a new card is tricky though: Halifax is the only bank to offer new bank accounts with an Electron card to its adult customers and this is for its basic bank account called Easycash.

Depending on the company, you may incur reduced fees by using a prepaid card. Ryanair, for example, waives booking fees if you use a prepaid MasterCard.

What is Which? and the OFT doing about the charges?

Which? issued a super complaint calling for surcharges to be outlawed, but as a campaigner for consumer rights it can only apply pressure. And as the OFT is a trade body, although it can advise and recommend that card surcharges should be banned or explained more clearly it doesn’t have the power to enforce these recommendations.

However, the fact that the OFT agrees with Which? should get the government to take notice  but the lack of government action so far means it looks like it will take more consumer pressure before it will commit to anything.

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Your Comments

AirAsia charged me £6 PER PERSON for paying with a card. There was no other way to pay it. I wish it had been 'around the £4 mark' for the total payment, like your article states.