/ Money, Travel & Leisure

Excessive card surcharges need to stop now, not in 2013

We celebrated when the government pledged to ban ‘rip-off’ card charges in response to our campaign. But some companies have increased or introduced surcharges in a bid to rake in cash while they still can.

The ban doesn’t come in until the end of the year, but Which? wants companies to scrap these unfair and excessive charges now.

To be in business, you need to take customers’ money one way or another, but processing cards should be considered a regular cost of running the company. If firms wish to charge those who pay by credit card extra, the fees should reflect the true cost to the business, rather than being used to squeeze extra profits out of consumers while keeping headline prices low.

Airline surcharges on test

Airlines alone charge customers £300m a year in card surcharges, according to the Office of Fair Trading. This is far too high.

Processing a debit card payment costs around 8p-20p, while credit card payments typically cost around 1.5% to 2% of the transaction value. But a family of four taking a return flight with Aer Lingus or Ryanair, for example, could pay £48 in debit card surcharges – that’s at least 240 times the typical processing cost of a debit card transaction.

The same family spending £2,000 on flights with Jet2 would pay a hefty £147 in surcharges if they paid by credit card.

The surcharge problem has grown worse over the years. Between 2004 and now, Flybe has increased its surcharges by 1,025%, while Ryanair has increased its surcharges by 1,400%. And while British Airways previously didn’t charge for credit card payments, it now charges £4.50 per passenger.

Some companies have even put up their charges since we submitted our super complaint in March 2011. BMIbaby, Flybe, Jet2 and Ryanair have all increased their surcharges, while Swiss and Lufthansa have introduced credit card surcharges of £4.50 per passenger.

No escaping surcharges

There is some good news: several companies have either reduced or removed their surcharges. Monarch, for example, has scrapped debit card charges – though they do charge a hefty £10 for credit cards. Easyjet has replaced its debit card fee with a flat fee of £9 per transaction, regardless of payment method. This is included in the total charges shown and is more transparent.

Over 50,000 people backed our campaign to end unfair surcharges, so while we’re pleased the government is taking acion, we will continue to work on this issue to ensure that the Consumer Rights Directive tackles ‘rip-off’ fees. Nonetheless, we want all companies to reduce or scrap their unfair surcharges now, rather than wait until the new rules come in at the end of 2012.

Which companies have you spotted that still charge excessive card surcharges? Name and shame them below.

Comments

I find Which coverage on this very misleading.” A family of four would be charged £48 by Ryanair” etc. This family of four pays £0. How? Easy, we have the Ryanair prepay card. Nowhere does your article mention this.
“Banning these charges would save you and me £265,000 a day” Don’t be daft, the companies will just push the price up somewhere else

Phil Smith says:
7 March 2012

It’s not daft to want the price paid to be reflected in the headline price. I note that Richard doesn’t mention the conditions in the small print of a Ryanair card. After six months, anyone who does not use the card will be charged £2.50 a month for inactivity, and if that charge puts the card into a negative balance a £10 charge will be made.

And it’s not daft to think that a Which article should tell you the whole story!

Phil Smith says:
7 March 2012

But it’s OK for you not to?

The point, as I am sure you know, is that these charges cannot be avoided, and the Which coverage says just that. The Ryanair card simply goes about it a different way. Unavoidable charges should be included in the headline price. I find it hard to understand how any ordinary customer could believe otherwise.

Steady on. Are you suggesting I am related to Michael O’Leary?! I am not, but I am a Ryanair fan. They have never bumped me off a flight like BA and BMI have done.
The point is the £48 is avoidable. Yes there are potentially CC charges but they are avoidable too.

Phil Smith says:
8 March 2012

Again you omit to mention that the only way of avoiding those charges is by using the card and as far as I know the only way to do that is to purchase more Ryanair products. Do you believe that unavoidable charges should be omitted from the headline price? By coincidence I have just been asked how you can avoid the charge for checking in online. The Ryanair website says:
“An online check-in fee applies to all reservations except in respect of certain promotional fares. This fee is charged on a per person/per one-way flight basis and amounts to €6/£6 for bookings made via http://www.ryanair.com/ and €12/£12 for bookings made via a call centre or at the airport.”
and:
“From 1st October 2009 airport check-in desks will no longer be available at any Ryanair airport. All passengers will be required to web check-in and those who have checked in bags will use the airport “bag drop” desks, if required. ”
More unavoidable charges omitted from the headline price.

Carmel says:
15 March 2012

I tried to book through e dreams and they were going to charge me £17.50 for using my credit card. I went direct to the air line (air lingus) and they’ve charged me £12. Will anything happen about these surcharge payments when surcharging is finally outlawed?

Stuart Ainsworth says:
23 March 2012

Last week I was working in Coventry and wanted to arrange taxis for 9 colleagues to get us to and from a local restaurant. With 9 people we needed two taxis, I called the company to ask if I could pay in advance with a card for simplicity. Response: unless the fare is over £20 they would not accept a card and even then (wait for it) there was a 40% surcharge – I quesried to make sure I had heard correctly and yes its a 40% surcharge! I asked the manager to call me to discuss but unsurprisingly he didnt bother, 4 journeys we actually £28 total for cash – and both drivers asked for a tip!! Its outrageous really.

Robert Jones says:
26 March 2012

I feel that, as indicated by the first comment, small businesses such as small taxi firms and individual taxi owners and some small retailers could be hard hit by bank charges and penalties for these services, but that in other cases, such as airlines with large turnovers in excess of millions, their surcharges are wholly inappropriate.

Beware of both TalkTalk & AOL – they both charge for using cards (same fee for credit or debit) to settle their accounts even if it is a recurring charge ! Of course TalkTalk own AOL and AOL introduced the fee … just after they were taken over. Clearly no connection there then.

TalkTalk charge £4.50

AOL charge £1.99

Keith says:
30 March 2012

I recently booked a ferry crossing from Dunkirk to Dover with Norfolk Lines. Every time I completed the booking form, it gave the charges in Euros, even though I was using the English website, in English. When it came to payment, the site listed the surcharges applied depending upon the method of payment – debit, credit etc. There were different surcharges for different credit cards – Visa, Mastercard, American Express, etc. including European cards. Interestingly, payment with any of the European cards was totally free of surcharges, which were only applied to UK cards. I have a Euro credit card, so I could have used that, but when I checked the price quoted in Euros and converted it to Pounds, I found that I was being charged about £4 more for the priveledge. I contacted the company to ask how I could pay in sterling, to be told that all single trip journeys starting on the Continent were charged in Euros. I solved the problem by making the booking with a UK company dealing with all the ferry operators, who accepted payment in sterling and did not add a surcharge to the bill. So, add Norfolk Lines to the list of rip-off merchants.

smuggley says:
9 April 2012

I recently had a new kitchen installed and when i queried the 2 1/2 % charge for paying by credit card the reply I got was ‘we make no money out of this and indeed with the banks being what they are charges continue to increase so the cost to us exceeds the 2 1/2% levy so we do in fact lose money on this particular transaction’. I’m not convinced. No one seems willing to provide actual figures of costs.

This seems a fair charge … when we signed a 5 year merchant account contract (note that … 5 years !!!) to get the best rates we contracted for variable fees of 1.15-2.00 % depending on the credit card type. Other merchant accounts offered 2.5-3.0% so we thought we did well. There is an additional fee of up to 0.5% to cater for non-UK cards and 50p is charged when a credit is issued if a client brings back an item. All that ignores the other account settlement fees, minimum monthly fee charge, card machine rental (usually around £25 pm), PCI compliance etc etc. If a card isn’t settled then we get a chargeback of at least £25 and we risk huge fines (unlimited) if we side-step any of the authorisation or data protection rules. Oh and although we are locked into a contract that doesn’t stop the bankers from increasing the fees … the ones I quote above are those ruling when we signed. They are higher now !

Chris says:
10 April 2012

Want to topup your mobile by card? Most use Mi-Pay.

Make sure you have selected your bank account and not your credit card, 40% credit card surcharge!!

You are better off buying a Topup voucher, supermarket, petrol station, news agent etc

Ronald Cavaye says:
15 April 2012

It isn’t just the cheap airlines who impose extortionate credit card charges. I have just booked a £2000 flight to Japan on Virgin Atlantic and, as usual, used my Virgin Atlantic Amex ((MBNA) to pay for it. One would think you’d be rewarded for using Virgin’s own financial product to pay for a Virgin flight. But no! That transaction cost a ridiculous £30 surcharge!!! This rip-off must be brought to an end.

Our AMEXCO basic electronic transaction rate originally contracted (so higher today) was 2.9% … Virgin charged you 1.5% which for Amex seems pretty good. All that excludes the account monthly overheads.

Some good news from a regular email received from FlyBE (see below) to whom I have personally complained on many occasions about their pricing policy.

I would say to the many commentators about card fees that yes, online systems do exist (we have one) and they help with overhead costs but only on the 2nd and subsequent machines installed. As a retailer we are expected to absorb the typical 2% credit card costs and 15-20p debit card charges from our gross margin but one can see that resellers of flights etc with low margins cannot absorb all that everytime. Buying a holiday on a credit card with a fee of only 2.5% is hardly a rip-off … why not ask if the agent will also accept a direct bank payment ? A credit card does of course also add a good deal of consumer protection for no extra (sort of free).

I was always given to understand that a retailer could only offer card services provided that they didn’t then offer discounts for cash ! Even American Express insisted that their card must be offered at the same selling price as for other (cheaper) cards … Amexco fees are much much higher that 2% !

On Apr 26, 2012, at 11:21 AM, Flybe wrote:

And starting from today…
– We will no longer charge for the use of debit cards when booking a flight.
– We will only apply credit card fee per booking, not as previously per passenger per sector.

… if I had read further then I would have found :

“There is no fee for debit card transactions. A fee of £9.00 per booking applies if paying by credit card.”

Angry tourist says:
29 April 2012

Having just booked 2 Thomson flight tickets to Orlando in August (already a ‘rip off’ due to school holidays) I was astounded to get charged £32.95 for using a credit card. To say this is an admin fee is a joke !

neil barrow says:
10 May 2012

I have very recently attempted to purchase a holiday from Shearings. The total was just under £700 and when I said I would use my credit card I was informed that there would be a 2.5% charge. This meant a further £16.65. I complained that it was disgusting and cancelled my holiday. They also wanted a further £20 to park at their station.

AM says:
12 May 2012

Please advise your readers that they can avoid credit card surcharges by sending a cheque – even though this is often not advertised. AG TIckets (Ambassador Theatre Group) add a £4 surcharge to EVERY ticket purchased (this was for the New Theatre Oxford),which can be more than 30% on the cheapest tickets. I was so incensed that I wrote a cheque for the face value of the tickets only and posted it to the box office address of the theatre. No problem – I received a call to say that they would hold my tickets for collection. When I complained about the surcharge on the website, the box office manager said that customers have the option of sending a cheque, as I did – but this is not advertised.

Janiegel says:
30 June 2012

I’ve just received confirmation of my holiday booking for a cottage in UK. They have charged me £50 credit card surcharge + a booking fee. In the small print they show a 1.99% charge for credit cards, but what would be much clearer for their customers would be to show what that means in practice. Eg: If you pay by credit card, cost is £1000, if you pay by debit card cost is £950. Then people can make an informed decision, rather than having the shock of seeing this extra cost on their bill.

thomson are charging 2.5% on credit card transactions.

Martin says:
8 November 2012

Travelodge are charging £2 on on credit card bookings on their website. Disgusting! How can we report them to the watchdog in charge of enforcing the fee bans? Who is enforcing this?

Peter says:
2 March 2015

I was told by Justgo Holidays that a 2 per cent charge was made when you use your credit card

Just been charged £2.10 card handling fee – on a 24.75 bill by Empire Cinemas. Nearly 10%