/ 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.


This issue goes back to one which was discussed ad-nauseam on the boards about the abolition of the cheque guarantee card and the anticipated demise of the cheque: BAnk Charges.

Banks CHARGE all retailers to process cards (they charge different fees depending on the card type too).

Banks CHARGE (huge) fees to all retailers to let them use card terminals (old manual ‘zip-zap’ card machines were FREE to the retailer, but banks have made it all but impossible to use these now so retailers have little choice).

EVERY TIME a card is inserted into a card terminal, whether the transaction is successful or not or even if it is cancelled by the retailer or customer, the terminal dials the authorisation centre thus incurring a minimum telephone call charge (probably about 5p).
To operate a card terminal the retailer must have at least one extra telephone line – line rental fees apply just as they do in your home. Busy retailers will have to have many lines so that terminals do not all grind to a halt fighting with each other for a telephone line connection.

Card terminals have to be plugged in to the electricity supply 24 hours a day. They don’t use a lot of power but it does add up, especially if you are a large retailer with tens or hundreds of terminals.
These costs should NOT be the retailers’ responsibility: it is the BANKS who are forcing us all to use cards to the exclusion of all else, and the BANKS should be paying the ‘phone line rentals, the electricity costs for running the terminals and the ‘phone call charges. Additionally the banks should be prohibited, by law, from charging for processing card transactions, because this is just another aspect of the banks profiteering.

Finally, banks charge a penalty fee to any retailer who does not generate sufficient handling fees in a given period (usually monthly). This penalty fee is applied ON TOP of the handling fees which are paid and is usually a flat rate. Thus if, for example, the bank requires the retailer to handle a minimum of 500 transactions per month, at let’s say 1% of the transaction value, but the retailer handles only 499 transactions, each generating lets say £1, the retailer will be charged £499 (transaction handling fees) PLUS the penalty (which I understand is often hundreds of pounds). This makes it difficult for many retailers to accurately forecast what the bank will charge them at the end of the month.

Of course it IS absolutely WRONG that retailers should charge more than the real processing cost and it is abhorrent and unforgivable that retailers should introduce new fees as they have in many cases since this ruling was announced. It’s also unacceptable and inexcusable that the ruling did not come into force at once.

BUT … the REAL COST of the transactions is way above the simple handling fees that keep getting quoted on Which? convo’s and it can also be hard to calculate in advance – factors which retailers WILL use to justify higher fees, even if they are wrong to do so.

The ONLY way to stop this situation is for LAWS to be introduced which PROHIBIT Banks from charging ANY fees for card transactions, including the penalty fees, AND which PROHIBIT the retailer from charging any more than the telephone line, call and Electricity costs for running the card apparatus. Alternatively the law could force the bank to pay all the running costs, AND prohibit the banks form making and charges, at which point a law prohibiting ALL card fees applied by the retailers could also be reasonably enforced.

BOTTOM LINE: It’s the BANKS who are behind all of this and until Cameron, Osborne et-al really do what all politicians have promised and REIGN IN the banks, this issue will never be resolved.

Which? should really be campaigning long and hard for the changes I have described – without them any other campaign can never hope to be more than partially successful.

Elaine says:
24 February 2012

Multiple passengers are processed in a single card transaction, incurring no additional running costs over a single passenger (except for the overall percentage total).

Harry says:
17 March 2012

Why are the banks still allowed to force companies to use antiquated dial up?

Most businesses that accept cards will have a broadband internet connection, which could authorise transactions without the cost of an extra landline — and would almost certainly do it faster too.

I can’t believe Tesco does individual dial-up authorisation for each transaction, so the technology must exist and there’s no reason why making a bit of hardware that plugs into a router (or uses wifi) should need to cost anymore than one that plugs into a phone line.


I’m strongly behind the comments above.

The majority of complaints below are against known offenders such as RyanAir who are just using credit card charges as an excuse to blag extra revenue while their business process is made far chaper and simpler by the use of credit cards, especially in online bookings.

Their infrastructure overheads per transaction are so small that their costs per transaction will be barely more than the transaction fee levied by the banks,

This is recognised by high street stores, who no longer have to process large amounts of cash, and especially by online retailers who couldn’t operate without card transactions.

I think the situation with taxi drivers is much more complex.
A taxi which will accept credit cards is providing an enhanced service – I think most people these days carry very little cash and pay for most things by card and in an emergency (need a taxi, not enough cash) the ability to pay by card may be a life saver.
However the transaction rates may be quite low, especially until it is generally established that you can pay by card, so the overheads are likely to be high per transaction especially when the equipment is first installed.
[I am ignoring here any financial advantage which may be accrued by dealing mainly or solely in cash 😉 ]
So it seems reasonable to pay a premium for such a service because of the value added.

Very small retailers with low volume low value transactions are still priced out of the card payment system because of the infrastructure costs.
Their margins will not cover the charges, and the percentage of the individual sale price they would have to charge would drive customers away.

If the banks want to do away with cheques then they will have to subsidise the small businesses, charities, local societies etc. who don’t want to deal solely in cash and so rely on cheques for payments.

keith bradshaw says:
16 February 2012

Another rip-off is having to pay for your flight in full even when your holiday is almost a year away. I used to book in May for a November flight and pay a deposit. Now it’s the whole fare upfront. Money in their bank not mine and although banks pay very little interest these days it still annoys.

Fliss says:
17 February 2012

Slightly separate issue………booking flights means we pay a tax. When we cancel or no show the company keeps this. How much does Ryanair and easy jet make by cancels or no shows by levying a tax which is then not paid to the govenment??
Money for nothing….genius

Elaine says:
24 February 2012

I have seen that taxes are refundable from airlines. Check the airline websites for exact terms and conditions.


I have just paid for a holiday in South America with a company recommended to me by a friend, and which i have no reason to doubt is a reputable and fair operator. The charge for paying by credit card was 2% of the total – consequently I paid for most of it by debit acrd (no charge) and some by credit card. 2% seems to me excessive