Rip-off charges for credit cards are to be axed as new rules for retailers will come to effect from now. The new law now means that ‘admin’ and ‘booking’ fees must reflect the actual cost of transactions.
Airlines, cinemas and other firms will be banned from imposing rip-off charges on credit card transactions from today. Customers who book their tickets using a credit card will no longer face the steep fees.
Under new rules, companies will only be allowed to impose surcharges that reflect the actual cost of the transaction. Hotels, car dealers and concert promoters have also been imposing excessive fees.
Many people do not know about the additional payment until they reach the end of the booking process. The travel and leisure industry alone charged customers up to £630million for card transaction fees in 2011.
Consumer Minister Jo Swinson said: ‘The practice of excessive payment surcharges has been ripping off consumers for far too long. They are fed up with thinking they will be paying a certain price for goods only to find out towards the end of the process that the final price is much higher.’
She added: ‘I am delighted that the ban will stop retailers from cashing in by charging add-on fees that simply do not reflect the real cost of processing the payment.
‘Consumers will be less likely to get nasty surprises as they will have a clearer and more transparent breakdown of what they are paying for.’
Richard Lloyd, from consumer campaign group Which?, said: ‘Over 50,000 people supported our campaign to end rip-off surcharges so we’re pleased the Government is implementing this ban.
‘For it to be effective there must be a tough enforcement regime and companies must play fair and not pass costs on to customers in other ways. We will be monitoring the ban closely and want people to tell us about surcharges they think are excessive.’
Britain is bringing the ban on excessive charges in a year early ahead of an EU directive which will outlaw the practice in 2014.
Micro-businesses and start-ups will be exempt from the regulation until June 2014, however, giving them more time to prepare for the ban.
But the new rules will not close the loophole which allows airlines such as easyJet and Ryanair to impose separate ‘administration’ booking fees unconnected to the use of credit cards.
Hotels, car dealers and concert promoters have also been guilty of imposing excessive charges on customers.
Many customers do not even know about the additional fees until they reach the end of the payments process.
Ryanair was last night still advertising administration charges of £7 each way for customers booking flights on its website – regardless of how they paid.
Credit card transactions incurred an additional two per cent fee, unless it was booked with a special Ryanair card.
The airline recently introduced the administration fee in response to the government signalling a crackdown on credit card charges.
Easyjet also charges a 2.5 per cent credit card fee and an additional £10 administration levy.
The travel and leisure industry charged customers up to £630 million in 2011 in credit card
The Office of Fair Trading estimates that customers were charged nearly £300 million by airlines alone in 2010.
Some 87 per cent of consumers object to credit card charges while 91 per cent objected to extra charges for debit cards, a study by the Office of Fair Trading showed.
– The Mail