Credit Card Surcharge

The credit card surcharge has become an unwelcome sight on many bills, often for transactions it’s important you pay with a credit card, making them difficult to avoid.

It’s an area that understandably infuriates the public, particularly when credit card surcharges are obscured as part of a retailers offers or promotions and only appear as part of the overall cost just as the consumer is about to confirm an order, usually online.

Low cost airlines and travel companies seem to be the worst offenders; closely followed it seems by many County Councils, ticketing companies and cinemas, and now heating oil distributors and even the DVLA. You may want to read our March Update on Credit Card Surcharging.

Airlines particularly are under fire for charging a fixed fee per person, per journey leg as opposed to a percentage fee which could be related more fairly to their true processing costs.

In the last 3 years we’ve seen credit card surcharging springing up all over the place as retailers and travel companies scramble around trying to make money in the in the currently ultra-competitive and unpredictable economic climate.

But the problem is the credit card surcharges retailers are applying bear no resemblance to the actual fees they pay for processing credit card transactions, and the public know this.

It’s common for retailers and other organisations to pay between 0.75% and 1.5% (depending on their turnover and the risk profile of their business) as a credit card processing fee to their merchant services provider, often their bank.

However, some retailers are charging 2% to 3% credit card surcharge to consumers, and we’ve seen some companies charge as much at 10% of the retail price of their goods for ‘processing fees’.

How do you avoid credit card surcharges; what are the authorities doing about them?

  • Firstly, we know it’s tedious, but it’s down to you to check out the individual retailer or company you’re dealing with and to see if they are applying credit card or other disguised payment surcharges (Ryanair).
  • If you identify a retailer making surcharges, ask yourself, can you buy the same goods for a similar price elsewhere, and easily avoid the surcharge?
  • If you can’t, the next option to consider is to see whether you can settle by debit card. Although it may be less convenient, and affords you less consumer protection, this may help you to avoid the fees. Payment by cheque can also be agreed with some retailers without paying a surcharge.
  • If you can’t settle with a debit card, some retailers will waive credit card surcharge in other instances, and you can make a specific challenge to the retailer and ask under what circumstances they’ll do this. Ryanair waive the surcharge if you pay them with some prepaid credit cards.

Finally, if you can’t avoid the credit card surcharge, don’t get mad, get even!

On the 7th March 2011 Consumer Watchdog Which? is lodging a super-complaint to the Office of Fair Trading (OFT) over the issue of unfair credit card surcharges. You can pledge your support for the campaign below, and hopefully together we can get the practice outlawed.


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