Card Fees for Travel Bookings Curbed

Published on 1 January 1970 by Raffick Marday

The fees that airlines and travel companies charge customers for bookings made through a credit or debit card have been targeted by new government regulations aimed at curbing excessive extra costs to consumers.

credit cardsWith actual transaction costs sometimes being as low as 20p to the company, there have been many questions raised as to how charges can be as high as £12 for card purchases.

The unpopular surcharges have risen both in frequency and actual cost in recent years, and have a widespread effect that is far from limited to the travel industry, since they can be levied on anything from utility bills to gig and cinema tickets.

Banks charge companies a "merchant fee" of approximately 2.3% for purchases of £50 and under made on credit cards, with the cost falling to around 1.1% for debit cards. If the total amount sits at £500 or above, the fee decreases to around 1.9% and 0.1% respectively.

Under the new legislation, companies will no longer be able to charge much more than the bank's merchant fees. At present, it is estimated that airlines make around £300 million a year from the practice.

Richard Lloyd, executive director of Which?, said of the new changes: “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.”

The Office of Fair Trading conducted research which found that 87% of consumers were against being charged extra to use their credit cards and 91% though it was unfair when paying by debit cards.

Consumer minister Jo Swinson said: “The practice of excessive payment surcharges has been ripping off consumers for far too long. They are fed up of 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.”

Holidays are an expensive outgoing, so it is important to keep costs down in as many ways as possible. One way to do this is to load a prepaid card with currency before you jet off abroad. This is a great way to curb your spending overseas and help you stay on budget.


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