March Credit Card Surcharge Update

2nd March 2011  

Consumer Action Groups and Government Watchdogs continue to delve deeper into the ‘can of worms’ that is the world of credit card surcharging.

We announced in February that the Office of Fair Trading (OFT) will be receiving a super-compliant over the practice from Which? on 7th of March. The Isle of Man Office of Fair Trading has now announced that it has made a formal representation to the Civil Aviation Authority (CAA) regarding the practice, which is causing widespread public anger.

Sharon Bowles MEP, who chairs the European Parliament’s “Economic and Monetary Affairs Committee”, has come out in support of the super-complaint.

Ms. Bowles said

“Understandably, retailers being charged a fee by banks to process debit and credit card transactions want to pass that cost on to the card-using consumer. However, it is wrong for retailers such as Ryanair to profit by charging consumers more, by way of a surcharge, than the original cost of the transaction”.

It appears that airlines are bearing the brunt of public fury over the surcharges, but other retailers are also now getting bad publicity over the unfairness of the frequently unavoidable cost.

Online booking agency Ticketmaster makes a ‘service charge’ for each ticket sold, and a further ‘processing fee’ for each online payment. These fees can total as much as 11% of the ticket face value, and average out at 9%.

The heating oil industry has received bad press this week as the latest sector to jump on the surcharging band wagon. This is particularly unpopular with already sky high fuel prices. .

Cut price airline BMI Baby has been strongly criticised for levying a £3 fee per person, per journey leg, even for customers who pay by debit card. Credit card bookings are charged at £4.50 per person, per one-way ticket with a minimum charge of £6.50.

Flybe charges a £4.50 booking fee per person, per one-way journey, with a further surcharge of £0.50p per person, per journey if payment is made by credit card. Flybe passengers can avoid the credit card surcharge if they pay with VISA Electron.

Monarch charges booking fees of 3.5% of the total booking transaction on all payment methods except Solo and VISA Electron.

British Airways charges a flat £4.50 fee per ticket booked with a credit card, customers can avoid the fee if they pay with a debit card.

Notorious airline industry ‘extra charger’ Ryanair advertises its best-buy airfares from £8, but inflicts a credit card fee of £5 per person, per leg on the booking. This means a family of 4 on a return journey will be faced with costs of an extra £40 just for the privilege of paying with their credit card. Customers can avoid the Ryanair fees by paying with certain prepaid credit cards.

A common thread to complaints from the public centres around the fact that these surcharges are often obscured as part of the online booking process, and are not mentioned in ticket promotions or advertised offers. Many only appear as part of the bill as the online order is about to be finalised.

Although in some instances it’s possible to reduce these surcharges by paying by debit card, many consumers feel understandably ripped-off because they have no option but to use their credit cards to cash-flow the outlay of the annual family holiday. Consumers also want to pay for holidays, air fares and other travel costs with credit cards because of the purchase protection this affords them in the uncertain economic environment.

If you’re fed up with being ripped off by credit card surcharges, you can pledge your support for the Which? super-complaint below.

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