News & Views - Savantor

Excessive card charges

Monday, 15 April 2013

There has been a lot in the press about excessive card charges imposed by retailers and finally something seems to be happening on this front. Such charges are imposed by retailers and the worst offenders often then try to pass the blame on to the payment system stating they are only recouping the fees imposed by issuers and/or Visa/MasterCard etc. Clearly this is not the case. The Consumer Rights (Payments Surcharge) Regulations will allow retailers to charge a small amount that reflects the true cost of processing a debit or credit card payment. The Office of Fair Trading (OFT) estimates this at about 2.5% on credit cards and about 50p on debit cards. Some travel firms in particular still seem to be charging a lot more for credit card transactions than the OFT guidelines indicate. I was recently charges £20 by Ryanair for the privilege of using my credit card to book tickets. Money Box has found that a number of travel firms are still charging debit card customers considerable sums too. According to the Office of Fair Trading, UK consumers spent around £300m on payment surcharges in 2010 in the airline sector alone.

A ban on excessive credit and debit card charges has come into force and under the rules traders must ensure that payment surcharges reflect the actual cost of processing the payment. This may explain why tickets for the Rolling Stones concert in Hyde Park on 6 July went on sale on Friday before the new rules came in. The ticket prices were supplemented by a "recorded delivery" surcharge of £19 and a further "delivery charge" of £5.50 per order!

The most notable cases of excessive charges have occurred when consumers book flights or theatre and cinema tickets. But the ban will cover all industries, including local councils and the DVLA – who have imposed these charges in the past. Which? said that in order for the ban to be effective there must be a tough enforcement regime and companies must play fair and not pass costs on to customers in other ways which are nice words but will probably only result in companies blaming security processes, IT development costs etc for maintaining the fees.

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