UK moves to ban credit card surcharges by travel companies

The practice of adding credit & debit card surcharges on travel purchases has become epidemic in the UK over the past few years, and now the Office of Fair Trading (OFT) has concluded the activity is unfair to consumers. Especially prevalent by budget airlines, with Ryanair charging £6 per person and flight segment to take payments, but also train companies and others, the practice has cost British consumers over £300 million in payments to airlines alone in 2009.

Fees are both higher and more widespread this year. The OFT has called on travel companies to change card surcharging practices or face enforcement action under consumer protection laws.

A 90-day OFT probe found “considerable evidence” of companies 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.



This type of fee, applied right before the purchase is made, is called “potentially misleading” as it makes comparing travel prices very difficult.

Adding insult to injury, payments cost only a fraction of the fees to process, and are pure revenue enhancement on the part of the travel companies. Debit cards, which only cost a few pence to process for payment transactions, should be made legally required to be free per the OFT's advice. Credit card payments, which do cost 2-3% to process at the most, can carry higher fees. However, today's levels of fees are far above the cost borne by the suppliers.

Goods and consumer group senior director Cavendish Elithorn said:

“The growth of internet retailing has brought massive benefits, but the increasing use of card surcharges is not one of them. You can’t buy online with cash and people are frustrated about being asked to pay for paying.”

“Consumers find it harder to shop around and find the best deal if they have to invest time and effort in discovering surcharges. This also weakens competition between retailers which is bad news for the UK economy.”

“We recognise that most traders want to treat their customers fairly. Many already meet the minimum standards we expect under the law and we have secured a clear commitment to change from others.”

“However, we will take enforcement action against any businesses that do not respond to today’s announcement and instead continue to use misleading surcharging practices.”

He added: “We believe there is also a strong case for a change in the law so that the cost of using a debit card, the almost universal payment method for today’s online consumers, is always included within the headline price.”

I believe it's well past time that these fees are abolished, and payment processing costs should be included in the airfare or ticket price. What do you think? Time to outlaw this practice?

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Last updated by Jack on 28 June, 2011 in Travel News.

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