'Hidden' online credit card fees to be banned next year
The Government is to block firms from using “hidden” credit and debit card surcharges to ramp up the price of flights, concert tickets and other goods.
The move follows a call by the Office of Fair Trading (OFT) for the fees, often added in the final stages of a transaction, to be banned for debit cards.
Treasury Minister Mark Hoban said consumers should be able to see “up front” how much they will have to pay.
The Government is to launch a consultation in the new year, with the ban set to be in place by the end of 2012.
The ban will extend across all forms of payment, not just debit cards, and will cover most retail sectors. Businesses will still be able to add a small charge to cover the cost of a payment method, but will not be able to load on excessive fees.
Mr Hoban said: “We want consumers to be able to shop around. They have a right to understand the charges they may incur up front and not be hit through a hidden last-minute payment surcharge.”
A European Union directive will ban businesses in many sectors, including airlines, from imposing above-cost surcharges on any form of payment from mid-2014 but the Government intends to act faster than that timetable.
Mr Hoban said: “We're leading the way in Europe by stopping this practice. The Government remains committed to helping consumers get a good deal in these difficult times.”
Consumer champion Which? submitted a ‘super-complaint’, backed by thousands of supporters, to the OFT earlier this year and has claimed debit card surcharges were adding £265,000 a day to the cost of flights.
The OFT found considerable evidence of firms using “drip pricing” practices for surcharges online — adding payment charges to the total price only after consumers have filled in a number of web pages during their purchase — and warned the practice was spreading.
Which? executive director Richard Lloyd, described the imminent ban as “a huge victory for consumers”.
Three examples of online credit card charges:
Ryanair and Easyjet: More than £10 per flight — up to 33% of the total cost, if you book early enough and get the lowest fees.
Odeon Cinemas: The firm charges 75p a ticket for online credit card bookings — nearly 10% on some purchases.
Thomas Cook: Up to 2.5% extra for users using their own credit cards. Charges can be up to £50 on its most exotic destinations.