Which? calls on Office of Fair Trading to investigate 'unjustified' use of processing costs to boost profits
The consumer group Which? is to ask the Office of Fair Trading (OFT) to investigate "excessive" credit and debit card charges consumers are forced to pay when buying flights and other services.
It will say today that it intends to launch a "super-complaint" into card surcharges, which it says are often sprung on the customer at the point of payment and can be considerably higher than the true cost to the retailer to process the transaction.
Which? says 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. It also has found that local authorities, estate agents, cinemas and even the DVLA are beginning to levy excessive charges for paying by card. It wants debit cards surcharges to be outlawed and controls on credit card fees to reflect their true cost.
The consumer body cites an example of a family of four booking a return flight with Ryanair. It says they would be charged £40 to pay by card when the cost to the airline would be around 20p to process a debit card payment and no more than 2% of the transaction value for a credit card. The same family would be charged £38 by Flybe and £5.50 by easyJet for paying for return flights by card.
Which? chief executive Peter Vicary-Smith, said: "There's simply no justification for excessive card charges – paying by card should cost the consumer the same amount it costs the retailer. Companies shouldn't be using card processing costs as an excuse for boosting their profits.
"Low-cost airlines are some of the worst offenders when it comes to excessive card surcharges, but this murky practice is becoming ever more widespread, from cinemas to hotels and even some local authorities."
Prashant Vaze, head of fair markets at Consumer Focus, agreed action is necessary: "Consumers are fed up with paying these surcharges. Often they have no other option, especially for internet transactions, where there is no alternative to using cards. The worst offenders even ask for surcharges on a per person basis.
"Any debit or credit card charge should only be cost-reflective. For far too long firms have made a quick buck through confusing and unfair card charges, which bear no relationship to the costs levied by payment agencies."
However, Ryanair spokesman Stephen McNamara was scathing about the Which? action. "Before making 'super-duper complaints' the clueless clowns at 'Which, Who or What' magazine, should do some basic research. Ryanair does not levy any credit or debit card payment 'surcharges'. Even our administration fee is avoidable by passengers who use our recommended MasterCard Prepaid."
Super-complaints allows designated consumer bodies to complain to the OFT and other regulators about "market features" that are harming consumers' interests. Once Which? has submitted its complaint, the OFT has 90 days to respond.
This is not the first time the low-cost airlines' pricing structure has been questioned. In 2007, the OFT took action to force 13 airlines, including Ryanair, to include all fixed, non-optional costs, such as taxes, in prices on their websites.