Consumers spend £18m on debit card surcharges in two months

Which? calls on government to take action to curb ‘excessive’ payment charges after lodging super complaint with the OFT Consumers are paying an estimated £265,000 a day in debit card surcharges for booking plane tickets, despite recommendations that the government ban such fees. Consumer organisation Which? submitted a super complaint – a complaint about market features that may be significantly harming consumers’ interests – to the Office of Fair Trading (OFT) in March, asking the regulator to investigate excessive surcharges for travellers who pay for flights with a credit or debit card. At the end of June the OFT proposed that charges for paying by debit card should be banned , and pointed out that a simple amendment to existing Payment Services Regulations by the Treasury would achieve this. But the government still has not taken action and Which? calculates that since the end of June consumers have collectively paid £18m in airline debit card surcharges. Nine of the 28 UK-based airlines charge customers for using debit or electron cards, and two airlines – Swiss and Lufthansa – have even announced plans to start charging customers a £4.50 fee on all payment card bookings from 2 November. Others, including Easyjet, charge up to £8. During its investigation Which? found that a family of four booking a return flight with Ryanair would be charged £40 to pay by debit or credit card. The actual cost to the retailer for processing a debit card transaction is 20p, and no more than 2% of the transaction value on credit cards. Airlines have faced particular criticism for “drip pricing” – adding charges only after the consumer has filled in a number of web pages during their purchase, making it difficult for them to compare the true cost of booking a flight. But the practice of adding charges for using a debit card is not exclusive to the airline industry: the Trainline website adds a £3.50 charge when paying for train tickets by credit card; and Eurostar charges £4. London cab firm Dial-a-Cab and Radio Taxis adds 12.5% to the cost of their fares for paying with a debit or credit card, and Addison Lee charges £4.40. Richard Lloyd, Which? executive director, said: “With most airlines yet to drop these card surcharges, and some introducing new fees, it is time for the government to put a stop to this. “A minor change to the law is all it would take to ban the charges on debit cards that you only find out about at the end of a lengthy online booking process. The government must act so that consumers can easily compare the cost of their flights.” In June, Monarch Airlines scrapped all debit card booking fees and said payments by credit card would trigger a flat fee of £10 a booking. Monarch chief executive Conrad Clifford said the charging shake-up was intended to provide an “upfront, transparent and simple to understand” policy. Which? is asking people to pledge their support for government action by emailing financial secretary Mark Hoban . A spokesman for the Treasury said: “The government is committed to working with the OFT to stop retailers, including airlines, imposing hidden surcharges on customers who pay by card. We are considering the OFT’s recommendations and will respond in due course.” Consumer affairs Debit cards Credit cards Banks and building societies Cheap flights Jill Insley guardian.co.uk

Posted by on September 6, 2011. Filed under News, Politics, World News. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.