Government to ban `excessive' credit and debit card fees
Big surcharges for paying by credit or debit card will be banned from the end of next year.
In an early Christmas present for our hard-pressed finances, the Government has announced that it is to ban ‘excessive’ credit and debit card surcharges on purchases from the end of next year.
This follows a super-complaint submitted by Which? to the Office of Fair Trading (OFT) in March this year.
The move means card fees on purchases such as flights, holidays, event tickets, utility bills and even tax discs for cars will be banned.
Mark Hoban, Financial Secretary to the Treasury, said that people “have a right to understand the charges they may incur up front and not be hit through a hidden, last-minute payment surcharge.”
It’s not clear how much companies have to pay in merchant fees for processing card transactions. But it’s been reported that some debit card fees are as low as 20p.
The Government says that companies can still "add a small charge to cover their actual costs for using any particular form of payment".
The move is significantly ahead of a European Union directive to end the excessive debit card fees, which was due to come into force in mid-2014 as part of the Consumer Rights Directive.
However, this directive will now come into force in the UK at the end of 2012. It also extends the ban beyond the transport industry. Airlines were the prime target of the original Consumer Rights Directive. Which? found that airlines had profited from debit card fees to the tune of £40 million.
The Government will launch a consultation into the ban on fees early in the new year.
The move follows an agreement by five banks earlier this week to stop charging fees for purchasing foreign currency using a debit card.
More: Ryanair hikes fees for bags and boarding cards | Airlines defy ruling to stop charging ‘unfair’ fees | Compare credit cards with lovemoney.com
Most Recent
Comments
-
I'm not interested in a company's overheads and don't expect nor want to know about what their suppliers charge them for anything. I just want to know the price I will pay for the service/goods that I asked for. Why can't they just make it that simple. If the customer really came first then it would be that simple, but profits come first so they need to confuse the customer as much as possible.
REPORT This comment has been reported. -
The phrase "about time" leaps to mind, I'm sick of having admin fees, booking fees, window tax... etc added onto whatever it is I want to buy (gig tickets, usually). The price is the price, it shouldn't vary according to type of payment. Bottom line is if you want to sell online you should be prepared to pay fees to the card companies and price accordingly - it's not as if anyone has the option of paying by cash or cheque anyway usually.
REPORT This comment has been reported. -
Why wait until the end of 2012? Is it to give them time to think of another rip-off?
REPORT This comment has been reported.
Do you want to comment on this article? You need to be signed in for this feature
24 December 2011