Government to tackle hidden credit card charges

By Lucy Bower

The Government is going to ban retailers from adding surprise charges when people pay for things by debit or credit card. It'll also stop them making a profit from those charges, according to a statement on behalf of the Department for Business, Innovation and Skills.

If you shop online and use your debit or credit card to pay for things, or if you have ever bought airline tickets online, you might be familiar with surcharges that are often added at the end of the transaction.

It's said that these charges are 'processing fees' but it's not clear how much it really costs retailers to process a payment. On top of that, the charges are not always highlighted to the buyer until the very last moment. It means customers who are attracted to low prices often end up paying more that they originally thought they would.

Customers are finding debit and credit card surcharges really annoying, so consumer group Which? led a campaign last year to highlight the issue.

The Office of Fair Trading (OFT) got involved too. According to the BBC, the OFT report last year revealed that air passengers alone had spent a total of £300 million on debit and credit card surcharges in 2010 - so the scale of the problem was massive.

As a result, in December last year, the OFT made recommendations that surcharges should be more transparent so that consumers could compare prices more effectively. It also recommended that charges shouldn't be 'excessive'.

Consumer Affairs Minister Norman Lamb said: "We want consumers to be able to pay for their goods and services without being hit by excessive hidden charges. That is why we are consulting on limiting the fees that traders can charge to consumers for using particular methods of payment.

"It can often be frustrating when purchasing a product or a service online, to find out only towards the end of the transaction that the final price is much higher due to things like payment surcharges. These proposals will stop companies from adding on these excessive charges, and allow consumers to see a clearer and more transparent breakdown of what they are paying for." Image © iStockPhotos / Adrian Assalve

Tags: credit cards, Government, Department for Business Innovation and Skills, Which, OFT, BBC

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