Happy 2016 – A Ban on Excessive Card Charges

December 28, 2015



In a move which will no doubt delight consumers, the Government has revealed plans to stop companies charging excessive credit and debit card surcharges. The new regulations will also force those charging card fees to reveal the cost before consumers have clicked through a multitude of webpages.

An image of a Visa card and a MasterCard

Image by James Meikle

The new regulations follow a lengthy campaign by not-for-profit consumer group Which?. Many Which? members were unhappy about being stuck with significant extra charges right at the end of the ticket buying process. Budget airlines, rail operators and events organisers were often cited as the main culprits of this type of surprise price inflation.

Overinflated fees

In recent years it has become common place for consumers to find themselves paying as much as £12 in card surcharges on a return budget flight. As part of their research Which? set out to ascertain how much it actually costs the companies to process the card payments. They reckon that when a customer pays by credit card it costs the company between 1 and 2 per cent of the price. However, if a customer pays by debit card the cost is believed to be around 10p to 20p; meaning that a company charging £12 for a card transaction would pocket at least £11.80 of the fee.

The Which? campaign climaxed in a super-complaint being submitted to the Office of Fair Trading (OFT). The complaint was supported by 43,000 Which? members with at least 10,000 consumers also lobbying MPs to do something about the charges.

The OFT launched an investigation into the charges and recommended that the government ban debit card charges and make credit card charges more transparent. However, the government has surprised many in the industry by going beyond the OFT recommendations and announcing plans to end all profiteering on card payments by 2017. They’ve also stated that sellers will have to show the final price, including all fees, much earlier in the sales process.

War on politics or profiteering?

This move by the pro-business Conservative Government is not so surprising when you take into account the fact that the European Union was already planning to ban profiteering on all types of payments from 2015. All you cynics out there could see this is a ploy to curry favour with the public by introducing regulations which were already due to be brought in anyway. It’s even more interesting when you consider that the Government has just stolen the thunder from the EU at a time when there has been considerable tension between the UK and the EU.

Aside from travel and event tickets, where else have you seen vastly inflated card fees? How do you think the budget airlines will respond? Do you think the Government would have introduced these regulations if the EU hadn’t already made similar plans? Share your thoughts in the comments box bellow.


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