As of the 6th April 2013 excessive credit and debit card fees have been banned in the UK. The decision to ban ‘rip off’ fees was made by the Office of Fair Trading (OFT) in June 2011 following a successful campaign by consumer group Which?.
Budget airlines, cinemas and theaters were among the worst culprits for charging excessive fees. Ryan Air for instance charged £6 per traveller. However, the problem was widespread with insurers, travel companies and even government departments being guilty. To add further frustration the fees were often added at the end of the transaction.
50,000 consumers backed the Which? campaign which resulted in a ‘super complaint’ being issued to the OFT which was later upheld. Research by the OFT and Which? found 90% of people objected to the charges and thought the government should take action.
Under the new rules companies will be expected to prove that any surcharges are representative of the cost to the business. Customers are encouraged to report any businesses charging excessive fees. The following could indicate excessive fees:
- Multiple surcharges per transaction
- A surcharge of more than 2% for credit cards
- A surcharge of more than 50p for debit cards
The ban comes into place ahead of an EU wide ban on excessive charges which will come into place in 2014. Micro-businesses and start-ups are excempt from the ban until June 2014, giving them more time to adapt.
Though the ban is welcomed, some businesses have already taken steps to get around it. Easyjet and Ryan Air have introduced administration charges in anticipation of the ban. The Ryan Air admin fee is £7 each way and Easy Jet are charging a £10 administration fee.
In 2011 the travel and leisure industry alone charged £630 million for card transactions. Companies being hit by the ban are being encouraged to play fair and not pass the fees on to customers in other ways. Anyone suspected of flouting the ban should be reported to Trading Standards.