Hidden card costs will be scrapped by the year’s end

NO CHARGE MP Mark Hoban
NO CHARGE MP Mark Hoban
Picture: Isle of Wight Radio/PA Wire

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HIDDEN card charges added to the end of customers’ bills when buying items like plane tickets and tax discs are to be scrapped by the end of the year.

A nine-month campaign led by consumer magazine Which? and the Office of Fair Trading has prompted Fareham MP Mark Hoban, Treasury minister, to announce the charges will stop.

The magazine said more than 50,000 consumers supported its campaign.

The ‘hidden’ charges are not revealed until after the consumer has entered their payment details.

Costs added on to easyJet tickets, for example, add up to £12.95, while the Trainline.com charges £3.50 to pay by card. The DVLA charges £2.50 to buy a car tax disc using a credit card.

But it typically costs 20p for a retailer to process a payment from a debit card, while it can cost up to two per cent of the purchase price to process payment for an item paid for with a credit card.

Mr Hoban said: ‘I think it’s reasonable to enable service providers, airlines and others, to make some charge for the cost of using credit cards but it has to be a reasonable charge – a fair charge to the consumer.’

He added: ‘We want consumers to be able to shop around. They have a right to understand the charges they may incur up front and not be hit through a hidden last-minute payment surcharge.’

Which? executive director Richard Lloyd welcomed the news.

He said: ‘This announcement goes further than the Office of Fair Trading’s proposals, finally putting an end to these unfair and excessive charges.’

But there is a fear that firms will still levy charges, but will refer to them as an admin charge, or a booking fee, rather than a card processing charge.

Ryanair, for example, adds a £6 admin charge onto the cost of booking each flight.

It means the government may find it tough to completely scrap the ‘hidden’ charges, despite its best intentions.

Mr Lloyd added: ‘The competitive pressure that will be applied because consumers will know what the real price is should keep that under check, but there is a risk that some prices will go up as a result of this.’

The ban in the UK is set to be in place by the end of 2012, will extend across all forms of payment, not just debit cards, and will cover most retail sectors.

Europe is also set to introduce a similar ban, though not for a year or two yet.

Meanwhile, Which? is urging retailers to get rid of their card charge costs now.