CREDIT CARDS

Government puts an end to hidden card surcharges

The Government has said it intends to put a stop to excessive surcharges often incurred by customers using debit or credit cards online.

Ministers will consult on the issue of these hidden charges early next year, with a ban expected to come into force at the end of 2012.

The Office for Fair Trading (OFT) found that these fees are usually added in the final stages of a debit or credit card transaction, and are often hidden from the consumer.  

Consumer watchdog Which? brought the issue to the attention of the OFT with a super-complaint that claimed that debit card surcharges were adding more than £250,000 a day to the price of flights.

The OFT found that many companies were using ‘drip pricing’ practices for surcharges online. This technique involves adding the payment charges to the total price only after customers have filled out several web pages during their purchase.

The move was welcomed by consumer watchdog Consumer Focus. Mike O'Connor, Chief Executive of Consumer Focus said that banks need to be more transparent.

“Charges that reflect actual costs and that are upfront for all to see are legitimate. But, the convenience for consumers of using a debit or credit card online should not be an invitation to firms to impose extra, hidden or excessive charges,” he said.

“Given that so many firms hide charges and confuse consumers as part of their routine business model, this decision is long overdue and good news for consumers.”

Which? found that airline customers alone pay more than £265,000 a day on card surcharges collectively.

 “The Government's decision to ban ‘rip-off' debit and credit card surcharges is a huge victory for consumers,” said Richard Lloyd, executive director of Which?.

“This announcement goes further than the Office of Fair Trading's proposals, finally putting an end to these unfair and excessive charges.”

Tags: banks, charges, CREDIT CARDS, finance, money