UK plans to ban "excessive" credit card surcharges

[bigdelta 46]

LONDON (Reuters) - Britain said Friday it plans to ban companies from making their customers pay excessive credit and debit card surcharges when buying flights and other services.

 

Firms will be allowed to add just a small charge to cover their actual costs.

 

Payment surcharges are especially prevalent in the airline sector, where Britain's Office of Fair Trading (OFT) has estimated that British consumers spent 300 million pounds ($470 million) on such fees in 2009.

 

"We want to make sure that consumers paying by card do not have to pay excessively high surcharges being imposed on them by some airlines and other businesses," consumer minister Edward Davey said in a statement.

 

The ban will apply to most retail sectors, not just the transport sector.

 

The European Union Consumer Rights Directive will ban businesses in many sectors, including airlines, from imposing above-cost surcharges on payments from mid-2014.

 

The British government plans to consult on implementing this provision of the directive early, with the goal of banning above-cost surcharges by the end of 2012.

 

"We need to consult to get those rules right. We need to make sure the right process is in place to help consumers challenge companies that levy excessive surcharges and we need to give business some time to get their systems ready," Treasury minister Mark Hoban told the BBC.

 

Irish airline Ryanair (:RYA.I) said its 6 pounds booking administration charge did not apply to all cards.

 

"I would not expect the rules to affect us as we don't impose any debit or credit card fees. Our administration charge can be avoided using certain types of cards," said Ryanair spokesman Stephen McNamara.

 

In June, the OFT called for the law to be updated to stop surcharges on debit card payments after consumer group Which? asked it to investigate.

 

Which? said card surcharges were often sprung on the customer at the point of payment and could be much higher than the retailers' costs in processing the transaction.

 

The consumer group singled out low-cost airlines, such as Ryanair and Britain's Flybe (LSE:FLYB.L - News) and easyJet (LSE:EZJ.L - News), who it said charge fees per passenger, per leg of a journey, even though they only have to process one transaction.

 

EasyJet declined comment and Flybe did not immediately respond to requests for comment.

 

Which? said excessive charges were also spreading among cinemas and hotels.

 

The UK Cards Association, representing the debit and credit card industry, called the government's move "a terrific Christmas gift for consumers."

"The UK Cards Association fully supported Which? on this issue and we're delighted that the Treasury has decided to bring into line those few businesses who have been excessively charging us all for using our cards," it said.

(Reporting by Adrian Croft, Paul Sandle, Sudip Kar-Gupta, Conor Humphries; Editing by Hans-Juergen Peters)

[davebowk 13]

_{I wonder if this could be applied to charges for drawing money from ATMs abroad}

[joekicker 53]

I wonder if this could be applied to charges for drawing money from ATMs abroad

 

I'm pretty sure the minister is extremely concerned at this allegation of excessive fees on Britons travelling abroad and will order an urgent study into such possible abuse. This guy is really serious about stemming such unwarranted attacks on consumers by Big Credit, don't you know that already? He's not like those other ministers from that other unspeakable party.

 

But on the OP:

 

What is this "Christmas gift" then"

 

Talk about a political windbag. Not a single fact or charge or saving, not a word about what is too much or too little, no indication of what is "just right". Adapted from Goldilocks by a professional politician. The UK Cards Association laughing their arxe off.

 

And it took FIVE people to assemble the politician's press release and an Internet story about Which? I'm so old I can remember when Britain had good... no, scratch that, when Britain had *great* journalism.

 

.

Edited December 23, 2011 by joekicker

[DrPat 423]

Two points here:

 

Firstly, with the credit card surcharges, on the likes of Ryanair, there is always a way round the surcharge if you take the trouble to apply for the right credit card – even if that card changes every year. In this way the people who can’t be arsed to get around the charges subsidise the one’s who do. It’s rather like the way virtually all UK pubs serve short measures of draught beer. If you ask for a full measure they are obliged to give it. So people who accept short measures subsidise the ones (like me) who always ask for a full measure. If they were forced by law to give full measures they would simply put the prices up to compensate – as will the airlines.

 

Secondly, the biggest rip-off on airfares is taxation. I recently used my air miles to upgrade one of the four legs of a flight to BKK. Upgrading the final leg from Dubai to the UK only cost air miles. If I had upgraded the UK to Dubai leg I would have had to spend the air miles plus £80 extra tax.

 

[jacko 8,815]

 

 

Secondly, the biggest rip-off on airfares is taxation. I recently used my air miles to upgrade one of the four legs of a flight to BKK. Upgrading the final leg from Dubai to the UK only cost air miles. If I had upgraded the UK to Dubai leg I would have had to spend the air miles plus £80 extra tax.

That was my first thought. The government doesn't like private companies doing what it does itself, adding surcharges to flight costs.

Perhaps this is a diversion tactic for the coming European Carbon tax to be added to flights.

 

Then there is the fact that credit card companies do charge retailers a percentage for handling the transaction, perhaps 4%, I have heard AMEX charge 5. I believe that charge should be passed on to the consumer, then, for the consumer who choses not to use a credit card, they can offer tha absolutely cheapest price. But how does a consumer avail himself of that price. It seems there are charges for using a debit card too, or admin fees, or whatever. I certainly can't go cash in hand to the airline office to pay for the ticket. Probably talking to a human being incurs a charge too. I have not seen an option booking a ticket over the internet to pay by bank transfer.

 

They will get you in the end.

[chatkeow 28]

Indeed all the charges on airline ticket purchase using plastic will just be added to the front line price ??

[DrPat 423]

_{I wonder if this could be applied to charges for drawing money from ATMs abroad}

 

You can of course avoid the surcharge on ATM withdrawals in Thailand by using your card inside the bank or exchange place. I have done this in Pattaya in the exchange just past the Royal Garden shopping centre. The only down side is you also need your passport with you for identification.