Stop 'rip off' charges About the campaign

Which? sent Mark Hoban 40 cupcakes to remind him of the £40m airlines have collected on debit card surcharges

What's the problem?

Consumers increasingly face high fees – known as surcharges – when purchasing goods and services when paying by credit and debit cards.

Low-cost airlines are among the worst offenders, with some charging a fee per passenger, per leg of the journey, despite the fact that they only have to process one transaction.

Which? accept that retailers face some costs when processing card payments. However, these charges are usually above and beyond what it costs the retailer, and they are often sprung on customers at the end of a long booking process. We think this is unfair so we issued a super complaint to the Office of Fair Trading (OFT).

On the 28 June the OFT responded to confirm they agree that excessive surcharging causes consumers' detriment. They're introducing enforcement measures, under the Consumer Protection Regulations, to take action against companies who are not transparent about their surcharges for paying by card. 

To make headline prices truly meaningful and comparable, the OFT called for traders to stop charging for paying by debit card. It also asked the government to change the law to prohibit surcharging for all debit cards.

The government went beyond the OFT's recommendation and agreed to put an end to all excessive surcharges. This will come into effect by the end of 2012 by the implementation of the Consumer Rights Directive in the UK.

What is the real cost of using different cards and payment methods?

When paying by debit card, the retailer pays pence not pounds to process the payment. A fairer cost would be 10-20p.

The cost of a credit card charge to a retailer is calculated as a percentage of the value. We think the real cost of processing a credit card transaction is no more than two percent of the value of the purchase. Retailers often charge a fixed value – so you could end paying more than the true cost. 

Why does it matter?

A public survey commissioned by Which? showed 62% of people felt the surcharge made a significant difference to the advertised price.

Which? believes consumers are being overcharged for placing purchases on their cards.

It is difficult to make an informed choice on the best price for a product or service - such as the cost of a flight – when you're not aware of the absolute total cost when carrying out your research. This weakens price competition amongst retailers.

Who wants to be stressed or angered when booking travel for business or pleasure? Aggravation is an unnecessary part of the purchasing process.

Are there other ways to pay?

Some airlines claim to offer an alternative, cheaper method of payment. We believe the alternatives are too niche and only available to those with basic or children's bank accounts.

Prepaid cards are growing in popularity, but a consumer couldn't apply for a prepaid card and use it instantly. At the point of purchase a consumer without a prepaid, Visa Electron or Solo card, has no option but to pay a fee.

We gathered support from thousands of consumers which we submitted to the OFT as evidence that the issue negatively affects consumers.

What's a super complaint?

Which? has special powers to issue the Office of Fair Trading with a super complaint. A super complaint can be made about any market that is not working properly for consumers. As consumers are not in the position to overcome this issue themselves, we issued a super complaint on your behalf.

What was in the complaint?

Which?'s complaint asked the OFT to investigate the issue of excessive surcharges for debit and credit card purchases. We asked for:

• Upfront costs. Retailers should tell consumers if they charge for purchasing on credit or debit cards, and if so what the cost is. The information should be clear and in plain English in the advertising and promotions.
• Fair charges. The cost of the charge to the consumer should be the same as the cost to the retailer.
• Retailers to absorb the debit card fee. As the cost of processing a debit card is so small, we think retailers should absorb this cost – and not pass it on to their customers.

The government agreed with our recommendations and will implement a ban on excessive card surcharges by the end of 2012, via the implementation of the Consumer Rights Directive in the UK.