Thank you to over 40,000 of our supporters who backed our campaign to end rip-off card charges. These sneaky fees for using credit and debit cards finally get the chop. Have you been stung by a card surcharge when making a payment?
A long-standing Which? campaign had a big win today as rip-off credit and debit card surcharges have been banned once and for all by the government.
Today’s announcement from the Treasury is an extension of the revised EU Payment Services Directive (PSD II). The ban will bring an end to retailers adding extra charges at the checkout for all card payments, including credit and debit cards as well as digital payment services like ApplePay and PayPal.
Sneaky card charges
Back in March 2011, we used our legal powers to submit a super-complaint to the Office of Fair Trading (OFT) to force an investigation into card surcharges. Our super-complaint came after we found that these charges were often far in excess of what it cost companies to process card transactions.
The OFT investigated the issue and upheld our complaint. It then began to look into what could be done to stop unfair debit and credit card surcharges. As a result, in December 2011, the government agreed to take action and confirmed it would ban excessive surcharges. This ban came in to force in April 2012.
But these rules meant that surcharges weren’t banned, but must reflect the cost incurred to the firm for processing the payment.
We estimated that it would be no more than 50p per transaction for debit card payments or 2% of the total transaction price for credit card payments. While it’s difficult to gather a full picture of how much card surcharges cost each and every business, it makes the justification to add charges of up to £10 for bigger transactions, such as for travel bookings, somewhat questionable.
And while some companies have dropped or reduced their charges over recent years, there are still many that haven’t. For example, an investigation by The Times last year revealed that Queen Mary University of London charged 2% on tuition fees in certain circumstances, Eurostar a £3 flat fee and Everyman Cinema 75p per ticket.
A real ban?
This new blanket ban on surcharges for all payment instruments will come into force in January 2018, but the question now is whether or not companies will absorb the cost and not pass them onto consumers in other ways.
Have you been charged unexpected fees for paying via credit or debit card? Do you think this ban will help you?
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