Zil Bareisis knows all too well why the British government is considering a ban on credit card surcharges that shock consumers purchasing tickets or products online.
As a payments industry consultant for Celent based in London, Bareisis has seen money literally taken from his pocket through unexpected fees when using his credit card in Europe.
“As a consumer, I find it really annoying because these fees are not made transparent until late in the checkout process,” he tells PaymentsSource says. “You think you are getting a good price only to find out that you've been slammed with an extra fee just to pay by card.”
In the past few years, complaints have escalated among British consumers and various watchdog groups, particularly Which?, about the hidden fees popping up at the end of transactions (
The Office of Fair Trading investigated the practice and brought the issue to the attention of the government last summer with a 71-page document outlining the abuse of surcharging and its costs to consumers (
In response, the UK Treasury Department announced last week the government would study the issue in early 2012 with the intent to abolish the practice by the end of the year and set the stage for Europewide credit card regulations by the end of 2014, according to the Office of Fair Trading.
Regulators should target the entire continent because surcharging is widespread in Europe, Bareisis contends.
“When I was working in Denmark, I paid a fee for pretty much all card transactions,” Bareisis says. “Here in England, consumers rarely get charged hidden fees by brick-and-mortar retailers.” But online merchants, especially the airlines and ticket agencies, often assess the charges, he says.
Airline Ryanair Ltd. declared this week its intention to fight any government ruling against surcharges (
In its investigation report, the Office of Fair Trading said consumers basically are “paying to pay” with debit or credit cards online because they often do not have the option to pay by check or cash. The office estimated UK consumers in 2010 spent £300 million (US$468 million) on payment surcharges in the airline sector alone.
In addition, the office listed examples of what it considered high surcharges, citing EasyJet charging £8, Ryanair charging £6 and thetrainline.com charging £3.50 extra to pay for tickets with credit cards.
The report stressed the need for consumers to be able to “comparison shop” from the listed, or “headline,” prices touted in advertisements or on merchant websites. Surcharges make it impossible to comparison shop accurately for products or services, the office contends.
Much has to be explained to the merchants and consumers before a surcharge ban is enacted, Bareisis suggests. “This latest announcement from the Treasury is a welcome step towards limiting this practice, but it will be interesting to see how it will be implemented,” he says.
The regulators must define “excessive” and explain how compliance would be monitored, Bareisis contends. In addition, merchants would need to know how many breaches would be penalized before more serious action would occur, he suggests.
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