Charges for paying by credit card are generally more reasonable now than in the past, but a Which? investigation found that they still vary a lot. Have you been stung by a credit card charge recently?
Being charged for using a credit card when making a payment is long-standing gripe for many consumers. As some of you will know, Which? has been campaigning against these surcharges for years.
We found that while some companies have cut their fees, we’re still finding others charging 2% or more – despite some of their costs being cut.
A brief history
In 2011, we made a super-complaint to the OFT against the excessive surcharges companies charged for paying by card. It resulted in the government banning companies from charging more than it costs them to process a card transaction.
And when we felt companies were still charging too much, we persuaded some of them to reduce their fees.
Why do companies charge at all?
Of course, there can be costs to a company for processing a card payment. These costs include an ‘interchange fee’ between banks, but last December these fees were cut for Visa and Mastercard. As a result, we expected the surcharges being passed on to consumers to be cut too. For example, Easyjet has cut its fees from 2% to 1%. But that doesn’t seem to be happening across the board.
It’s hard to know exactly what it costs every business to take credit card payments – and it might cost some companies slightly more to process credit card payments than others. But when customers can’t see what these costs are, they might question why one company charges 3.5% while another is only charging 1%.
This could soon be a thing of the past (mostly)
The UK government is planning to implement a new Payment Services Directive that will ban all surcharges for Visa and MasterCard debit and credit cards (but not American Express). The latest expectation is that it should come into force as early as 2017.
In the meantime, we’d like to hear from you. Have you come across any companies with high credit card surcharges recently?
Our full investigation into credit card fees can be read in the August edition of Which? magazine.