Super-complaint over credit card surcharges

11th February 2011  

The Office of Fair Trading (OFT) is to receive a super-complaint over the practice of retailers charging consumers for the privilege of using their credit card or debit cards to pay for goods and services, although it’s the means of payment that often costs the retailer the least to process.

It appears that this sordid practice which infuriates the general public and which has been heavily criticised by consumer groups has become top of the agenda for consumer’s association Which?

When the super-complaint documents hit the desk of the OFT on March 7th Which? will argue that the surcharges levied by retailers, airlines and even local councils are higher than the actual cost they incur for processing the credit card and debit card payments.

This means the consumer is being sold a lie as the retailer or company making the surcharge is making extra profit out of the process of surcharging. This is something that the OFT is likely to take a very dim view of.

Peter Vicary-Smith from Which? said

“Companies should not be using card processing costs as an excuse for boosting their profits.

“Low-cost airlines are some of the worst offenders when it comes to excessive card surcharges but this murky practice is becoming ever-more widespread, from cinemas to hotels and even some local authorities.”

Most retailers’ credit card surcharges seem to be around 2.5%. It’s common for larger businesses to pay the credit card merchant services companies that process their transactions fees under 1%, meaning the retailers are surreptitiously skimming 1.5% extra profit from the customer. On big ticket items this is clearly a great scam.

With the drop in consumer spending we’ve witnessed in the last 3 years, retailers are looking at every conceivable means they can do to hold onto their revenues and margins. Consequently the grubby practice is spreading like wildfire as companies look at their competitors getting away with the practice unchallenged.

When the super-complaint is handed to the OFT, the Government regulator will be required to give a formal response within 90 days. If the OFT thinks there is a case to answer, it will probably launch a full investigation in its own right.

In the meantime, the credit card super-complaint has caused a volley of claims and counter claims across various industry bodies.

The super-complaint by Which? will outline that:

  • Retailers should absorb the cost of debit card processing as they have always done in the past, and not charge customers anything extra for any varying methods of payment
  • Retailers should use plain consumer language and be upfront about surcharges
  • Any charges that are passed on should be the same for consumers as they are for the retailers

What makes the whole situation even more unpalatable is that the charges made by credit card merchant services companies for processing particularly credit card transactions have come down in the last 20 years. It seems unreasonable therefore that retailers have chosen the last year to make these surcharges so widespread.

If there are genuinely retailers or other organisations out there who are still being charged 2.5% to process their credit card transactions, they should shop around for a better merchant services deal.

In December the OFT issued a public warning to retailers about misleading consumers with complex price offers including the process of ‘drip-pricing’ which has become common with online transactions. This is where customer will be tempted by an advertised price and then as they follow through the order process, various other charges appear such as compulsory delivery costs and even VAT which should have been included in the advertised offer.

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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