Merchant surcharges for debit and credit card purchases in the United Kingdom are unfair, and merchants should be upfront regarding any additional fees they might charge, contends Which?, a UK-based consumer-protection advocacy group.
The organization on Feb. 11 announced plans to file a complaint with the Office of Fair Trading seeking to investigate card surcharges, especially those imposed online by airlines and providers of tickets for movies and other events, which the group says are the biggest imposers of the extra fees.
“There is no justification for excessive card charges,” Peter Vicary-Smith, Which? chief executive, said in a news release. “Paying by card should cost the consumer the same amount that it costs the merchant. Merchants shouldn’t be using card-processing costs as an excuse for boosting their profits.”
Which? accepts that merchants incur fees to accept card payments, but it believes they should set their surcharges at a level that reflects only the additional costs their acquiring banks impose on them. Moreover, for debit card purchases, because the cost to the merchant is so small, they should just absorb it instead of passing it on to their customers, Which? says.
The UK Cards Association also has voiced its support for Which?’s complaint and has called for government action to “curb excessive surcharging for card payments ahead of the last election,” Melanie Johnson, UK Cards Association chair, noted in an e-mail to PaymentsSource. Consumers should be able to see what the true costs are of their purchases, she added.
The British Retail Consortium also believes that Which? is right to draw attention to excessive charges levied on consumers who use debit or credit cards, but it contends Which?’s complaints are misdirected. Which? is wrong to blame “retailers” in general because the consortium does not classify airlines and cinemas as retailers, the group said in a Feb. 11 response to Which?’s complaint.
Most UK-based retailers protect cardholders from banks’ excessive charges, and “we have been engaged in a longstanding campaign and legal action to bring those fees down to levels that reflect the actual costs of processing transactions. Banks should play fair by their customers as retailers do with theirs,” according to the consortium.
Surcharges are additional fees consumers pay for purchases when using a credit or debit card or other payment methods such PayPal Inc., checks or direct debit, Which? notes in its complaint. The fees may fall under various names, such as handling fees, booking charges or administration fees, Which? notes.
Many of the charges often are unclear until the end of the payment process, and consumers usually incur them when making purchases online when buying airline or event tickets or when paying utility bills or booking hotel rooms. The additional fee varies because merchants calculate the amount differently, according to Which?.
As such, surcharges often distort the real price and may make price comparisons challenging, Which? says in the complaint. For example, a family of four flying from London to an international destination may pay extra fees ranging from £5.50 (US$9 or 6.50 euros) to £40 when paying with a debit card, according to Which?.
In a January online survey Which? conducted involving 1,305 UK consumers, 62% of respondents said that additional fees made a significant difference to the advertised price, while 49% said it made comparing providers difficult. About 79% said they should not have to pay fees when making purchases with credit or debit cards.
Which? plans to submit its complaint to the Office of Fair Trading at the end of March after it gets more consumer support.
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