The use of “hidden” credit and debit card surcharges to ramp up the price of flights and other goods is being banned by the government.
The crackdown follows a call by the Office of Fair Trading for the fees, often added in the final stages of a transaction, to be blocked for debit cards.
Treasury minister Mark Hoban (pictured) said consumers should be able to see “up front” how much they will have to pay.
The government will consult on the issue in the new year, with the ban set to be in place by the end of 2012.
Consumer watchdog Which? submitted a “super-complaint” to the OFT earlier this year claiming that debit card surcharges were adding £265,000 a day to the cost of flights.
The ban will extend across all forms of payment, not just debit cards, and will cover most retail sectors. Businesses will still be able to add a small charge to cover the cost of a payment method, but will not be able to load on excessive fees.
Hoban said: “We want consumers to be able to shop around. They have a right to understand the charges they may incur up front and not be hit through a hidden last-minute payment surcharge.”
A European Union directive will ban businesses in many sectors, including airlines, from imposing above-cost surcharges on any form of payment from summer 2014 but the government intends to act faster than that timetable.
Hoban said: “We’re leading the way in Europe by stopping this practice. The Government remains committed to helping consumers get a good deal in these difficult times.”
The OFT found considerable evidence of companies using so-called “drip pricing” practices for surcharges online – adding payment charges to the total price only after consumers have filled in a number of web pages during their purchase – and warned the practice was spreading.
Which? executive director Richard Lloyd said: “The government’s decision to ban rip-off debit and credit card surcharges is a huge victory for consumers.“This announcement goes further than the OFT’s proposals, finally putting an end to these unfair and excessive charges. Over 50,000 people supported Which?’s campaign to see these fees stamped out.
“Given that airline passengers alone pay more than £265,000 a day in card surcharges, businesses shouldn’t drag their feet over this. While the law will come into force at the end of 2012, we want companies to be upfront and fair over card charges today.”