UK to ban high credit card surcharges

2011-12-23 23:00

London - Britain plans to ban companies from making their customers pay excessive credit and debit card surcharges when buying flights and other services, ahead of a similar move by the EU.

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 £300m ($470m) 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," said consumer minister Edward Davey said in a statement on Friday.

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


The EU 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," said Treasury minister Mark Hoban.

Irish airline Ryanair said its £6 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 spokesperson 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 and easyJet, which it said charge fees per passenger, per leg of a journey, even though they only have to process one transaction.

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

A Flybe spokesperson said the airline had been fully engaged with the OFT and the Civil Aviation Authority to ensure that ancillary charges, including card surcharges, were clear from stage one of the booking process.

He said Flybe would respond to the government's consultation by providing details of the costs it faced, "including the card companies' insistence that all airlines lodge substantial cash reserves to cover their losses in case of claims against the card companies".

EasyJet declined to comment.

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

  • Steward - 2011-12-24 01:45

    Now if we could just get our government to take on the banks with their ridiculous fees, not to mention penalty fees if a debit order bounces. What is the point of that? A person would think a bank is held liable if your debit order reverses.

  • alan.erwin1 - 2011-12-24 10:45

    I come from the uk and live here in SA, I will be returning to the UK next year after 7 years in SA. I have had a bank account in the UK for over 30 years and never paid a bank charge and get interest on my money sitting in a cheque account. Two weeks ago I had a problem at an ATM which refused to give out cash on my UK bank card, I went to another ATM which worked fine and gave me cash as requested. An hour later a bank official phoned my from the UK and after some security questions asked if all was ok as they had seen my problems at the ATM, thats a 9,000 kilometer international phone call (free of charge to me) Now that is service - thank you HSBC of England. The bank charges I get here with my SA bank FNB is a joke and their service is very poor.

      christovb - 2011-12-24 11:32

      I disagree. FNB is not bad at all, all banks have their good and strong points, even HSBC. I am very proud of the banking system in South Africa! There is always room for improvement as for everyone, including you, and every system. A blessed festive season for you and your family!

  • alan.erwin1 - 2011-12-24 17:14

    Christovb – So you disagree? Well you are entitled to your opinion and if you are happy all well and good – Have a great Christmas and all the very best for 2012. FNB also say have a great holiday, thanks for all the money we rob you of each year and thanks for letting us use your money to make even more. By the way I bet you work for FNB?

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