OFT Plans Changes to Debit and Credit Card Charges

Jun 29, 2011   //   by sam   //   Credit Cards  //  Comments Off on OFT Plans Changes to Debit and Credit Card Charges

Credit Card KeyboardTravel companies are to stop charging customers hidden fees for purchasing tickets using debit and credit cards as payment.

Airline, rail and ferry companies typically give no warning of these card charges on their websites until customers have reached the end of the online booking process (in some cases after navigating through 6 pages).

The Office of Fair Trading (OFT) has now stepped in and ordered travel companies to clearly show any extra charges for debit or credit card payments from the offset.

It is also pushing to pass a law changed that would see debit card charges abolished altogether.

According to the OFT, travellers spent £300m in card charges last year in the airline sector alone; fees that could have been put towards fixed-rate bonds or other savings rather than being handed out to credit card companies.

If travel firms fail to comply, the OFT has pledged to take action using consumer protection laws.

Cavendish Elithorn, of the OFT, said: “We will take enforcement action against any businesses that do not respond to today’s announcement and instead continue to use misleading surcharging practices”.

Many experts believe that the charges should reflect the actual cost to retailers, and that any cost for debit card payments should be absorbed by the retailers.

Low-cost airlines are thought to be the worst offenders, with several cinemas, hotels and even local authorities also charging the fees.

The government has also shown its support in the introduction of European rules, which would force businesses to charge fees to reflect the cost to them. However, it may take as long as two years before the rules are adopted in the UK.

‘Paying for paying’

The OFT’s report shows that Airline Easyjet charges its customers £8 for making payments by debit card and £8 plus 2.5 per cent of the total transaction for those that choose to pay by credit card.

Airliner Ryanair charges £6 per journey for debit and credit cards alike.

Several travel companies have already agreed to include these surcharges within headline prices on their websites.

Mr Elithorn of the OFT has said he expects the change to come into force within the next six months.

However, despite companies having to be clearer about the final cost including payment fees, retailers will not be obliged to keep the surcharges in line with the cost of processing payments.

Mr Elithorn added: “There is frustration when people think they are paying for paying, rather than paying for the product”.

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