Clampdown on debit and credit cards going ahead
- 1 September 2012
- From the section Business
The government is going ahead with its plan to ban retailers from imposing excessive or surprise charges on people who pay by debit or credit card.
The plan was first announced last December following a recommendation from the Office of Fair Trading (OFT).
Airlines, theatres and other retailers will have to make sure their card charges are clearly displayed upfront.
The government will also limit the size of the charges, so retailers and traders cannot make a profit from them.
"Traders will no longer be able to make a profit by charging the consumer for credit or debit card use above the amount it costs them to process that payment," said Consumer Affairs Minister Norman Lamb.
"These proposals will stop companies from adding on these excessive charges, and allow consumers to see a clearer and more transparent breakdown of what they are paying for."
'Held to account'
The precise start date for the new rules will be decided during a consultation this month, but the aim is to bring them in by the beginning of January.
The rise of internet shopping has brought frequent complaints that the websites of some retailers and traders are deliberately set up to ambush their customers.
Surcharges on the cost of items are added at the last moment, just before purchase, supposedly to cover the cost of processing a card payment.
And some traders - such as travel companies, theatres, airlines and even local councils - have been accused of profiteering by inflating those charges to levels far above their real processing cost.
"The government must ensure that all businesses only charge the genuine cost they incur for processing the payment and that they are upfront, and make this clear to consumers," said Richard Lloyd, of consumers' association Which?
"We also want to see a robust enforcement regime in place, to make sure firms are held to account if they flout the ban."
'Payment to pay'
Last year's OFT report, in response to a super-complaint from Which? found that passengers had spent a total of £300m on card surcharges in the airline industry alone in 2010.
It described the changes as little more than a "payment to pay".
In January the airline Easyjet brought in a £9, upfront, administration fee, replacing the previous £8 booking fee levied on anyone paying with most debit cards.
In July, after further investigation by the OFT, 11 other airlines were forced to put their debit card surcharges in their headline ticket prices, instead of adding them at the end of the booking process.
They were Aer Lingus, BMI Baby, Eastern Airways, Flybe, German Wings, Jet2, Lufthansa, Ryanair, Thomas Cook, Thomson (TUI) and Wizz Air.