Credit and debit card surcharges 'are excessive'

image captionBudget airlines are likely to be at the centre of the complaint

A super-complaint is to be launched about the "murky practice" of surcharges levied on customers who pay by debit or credit card.

The charges are higher than the actual cost of processing these payments, says consumers' association Which?

Retailers, local authorities, estate agents and cinemas all imposed the charges, it claimed, with low-cost airlines the worst offenders.

But a group representing retailers said the complaint was misplaced.

When the super-complaint is handed to the Office of Fair Trading (OFT) on 7 March, the regulator will be required to give a response within 90 days.

If the regulator thinks there is a case to answer, then it can decide to launch a full investigation in its own right.

The super-complaint by Which? will call for:

  • Retailers to tell customers upfront and in plain language about surcharges
  • The charges levied on customers to be the same as the cost to the retailer
  • Retailers to absorb the "small" cost of processing debit card payments.

In the meantime, plans for a super-complaint have led to a series of claims and counter-claims across various industries.


Which? is arguing that the cost of processing a debit card payment is no more than 20p per transaction. For credit cards, it estimates the cost to be no more than 2% of the transaction.

The consumer group claims that the surcharges - levied at the point of payment - are often a fixed amount far in excess of the retailers' costs and can increase owing to the number of people purchasing tickets.

It also claims that low-cost airlines charge a fee per passenger, per leg of the journey, even though there is only one payment to process.

"There is simply no justification for excessive card charges. Paying by card should cost the consumer the same amount that it costs the retailer," said Which? chief executive Peter Vicary-Smith.

"Companies should not be using card processing costs as an excuse for boosting their profits," he added.

image captionThe group that represents the card providers has welcomed the complaint

Which? said low-cost airlines were the worst offenders, with cinemas, hotels and even some local authorities starting to copy them.

It said a family of four booking a return flight with Ryanair would be charged £40 to pay by card - much higher than the cost of processing the payment.

Stephen McNamara, of Ryanair, defended his company's practices and said the complaint from Which? was misconceived.

"[Which?] says we charge 5 euro or £5, simply to process a card transaction and that is incorrect," told the BBC.

"The charge is to cover the entire system - the building of the website, the booking engine, the security of the website at the very end."


The claims by Which? also prompted an angry response from the retailers' body, the British Retail Consortium (BRC).

It blamed the card providers for imposing high charges for processing card payments, and argued that many retailers were innocent of sharp practice.

"On average, the banks' charges for processing a credit card transaction are 15 times higher than for cash. But responsible, competitive retailers charge customers the same price for an item regardless of how they pay," said BRC director general Stephen Robertson .

"I cannot speak for budget airlines, but retailers are actually protecting card-using customers from the bank's excessive charges on them.

"We have been engaged in a longstanding campaign and legal action to bring those fees down to levels that reflect the actual, very low, costs of processing transactions," he added.

However, the group which represents the debit and credit card providers has taken the side of Which? by supporting the super-complaint.

"We called for government action to curb excessive surcharging for card payments ahead of the last election," said Melanie Johnson, who chairs the UK Cards Association.

"It is high time customers are given a voice where the true cost of what they are buying is made clear to them."

'Confusing and unfair'

Prashant Vaze, head of fair markets at watchdog Consumer Focus, said: "Any debit or credit card charge should only be cost reflective.

"For far too long firms have made a quick buck through confusing and unfair card charges, which bear no relationship to the costs levied by payment agencies.

"We hope the Which? super-complaint forces the OFT to take further action against companies padding their profits with unfair excess charges."

Super-complaints have been in the armoury of consumer groups since 2002.

Examples so far have included complaints about bank charges, payment protection insurance, prison call costs and doorstep lending.

In December, the OFT warned retailers about tricking customers with misleading price offers, including "drip pricing" such as adding compulsory delivery costs.

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