Fighting Credit and Debit Card Charges

‘Which?’ has submitted a super-complaint  to the Office of Fair Trading (OFT) asking it to investigate excessive credit and debit card surcharges. A super complaint can be made if any market or feature  is significantly harming the interest of consumers.

The consumer champion believes the price you see is what you should pay. Even in a worst case scenario the added cost should be no more than the actual cost to the retailer of collecting the payment from the card provider.

You are likely to have suffered if you are a regular online shopper particularly for services. Which? believes the ‘charges are unjustifiable and becoming increasingly widespread’.

Surcharges for Using Credit or Debit Cards

  • Travel companies, ticketing organisations even bailiffs and some public utilities and service organisations add surcharges.
  • When paying by debit card, the retailer pays pence not pounds to process the payment. Credit cards are slightly dearer. A fairer cost would be 10p and 80p respectively.
  • Which? offer the following examples of excessive surcharges
    • ‘A £25 debit card charge to pay a £5,000 deposit to rent a flat through Foxtons, one of London’s biggest letting agents.
    • Train booking site The Trainline adds a £3.50 charge for paying by credit card, while Eurostar charges £4.
    • London cab firms Dial-a-Cab and Radio Taxis add 12.5 per cent to the cost of their fares for paying with a debit or credit card, and Addison Lee charges £4.40.
    • Bath and North East Somerset council charges a 3 per cent credit card charge, while the DVLA adds £2.50 for paying by credit card.
    • Admiral Insurance levies a £5.95 fee for credit card use; Swinton Insurance charges 2.5 per cent.
    • A family of four booking a return flight with Ryanair would be charged £40 to pay by debit or credit card.’

Why These Charges are Bad

  • There is often no alternative or sensible way of mitigating the charges.
  • The advertised price is being subsidised  and hidden by the profit made on the charges.
  • Comparison between suppliers is difficult and impossible for some consumers.
  • The practice is frustrating and misleading. Who wants to wait until near the end of a transaction before being slapped with extra costs.
  • This ‘Price Framing’ affects the choice consumers make and this distorts the market.

Avoid Paying Extra Charges

  • Paying is not an ‘optional extra’, but some cards are still free to use including Visa Electron.
  • Cash is still legal tender or it was the last time we looked. I know that is virtually impossible for some web transactions.
  • Prepaid cards should not attract charges. Mastercard, FairFX and Neteller may be suitable.
  • Lobby for regulation that will restrict and control the scale of the charges.