In the midst of the grim economic data this Christmas it’s nice to see the newspapers (even the Daily Mail!) focusing on some good news today.
On Tuesday I secured a debate in the Commons and called on the Government to ban unfair credit and debit card surcharges. I am absolutely delighted that today the Government has heeded those calls. I have been working with Which? since July to stop businesses from charging people ridiculous fees just to buy their goods.
The Government has recognised that debit and credit card surcharges are not only extremely unfair to consumers, they have a serious impact on economic growth as consumers lose confidence in the products they buy and the businesses they buy them from. Moreover, these charges are harming a key UK growth industry: internet shopping. The measures announced today should end this appalling situation by the end of next year.
Here are some of the comments I made on Tuesday:
This Christmas, more people than ever are buying their presents online. Last week’s retail figures showed that internet shopping, or, as it is rather mysteriously called by the Office for National Statistics, non-store retailing, rose nearly 20% between November 2010 and November 2011—a staggering increase. Purchases made online now constitute 12.2% of non-fuel purchases. It is therefore essential that the Government do everything they can to ensure that when we buy something online the prices are fair, the process is easy and the transaction is transparent.
That is simply not the case and the problem with surcharges is getting worse. A recent study by Which? found that in 2004 Ryanair charged its customers 80p for debit card payments, but that now passengers have to fork out £12 just to be able to pay for their flight. The British Retail Consortium, meanwhile, estimates that the transaction costs are 37p for credit cards and 9.2p for debit cards—rather less than £12. Those costs are no longer surcharges but a business model in their own right, and one that severely undermines legitimate economic growth. If Ryanair’s surcharges have risen 15 times in seven years, just think what such charges will do to economic growth across the country as we pull ourselves out of recession.
When consumers choose to buy something, they do so in the belief that the price is fair and that they have got a good deal. So, when hidden surcharges are added at the end, consumers come away feeling wronged and the incentive to buy is greatly reduced. That is compounded by the fact that businesses are incentivised to think of new ways to get away with hidden costs, rather than delivering desirable products or services at the cheapest possible price. Prices go up and innovation is throttled, harming society as a whole. The Government must act now or risk stifling our fragile recovery.
* Julian Huppert was the Liberal Democrat MP for Cambridge from 2010-15
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7 Comments
I’m happy to hear the good news. Its about time the goverment starts to look after us the consumers. With this deep recession going on, we need to be supported through it because nowadays we as people of the country are not making enough money to spend or to live properly since inflation is so high and everyone wants to just take and not give back to us. How do they expect the world to go around if its just take and take, until where bleed dry. Does anyone agree with me?
I understood this was required by European law by 2014. Was this not the case?
Nigel, You are corret “The EU requires all countries to bring in measures to limit payment surcharges to the actual costs by mid-2014”.
Living in France I get ‘hit’ by Ryanair’s “surcharge” when flying to the UK. I looked up their response and, “We don’t have any debit or credit card charges so this will not apply to us,” said spokesman Stephen McNamara.
More worrying is that ‘The Consumers’ Association of Ireland’ (CAI) said it feared that, regardless of the planned ban, customers would end up paying the same.”If you close off one avenue to them, airlines and concert ticket providers and anyone else with these charges will end up calling them something else or putting the costs on elsewhere, you could put money on it,” said CAI chief executive Dermott Jewell.
I wonder how UK ‘offenders’ will respond to the ban.
This is good news but it could be so much better.
It’s not too long ago that we were hearing how cheques were to be abolished because of the cost of processing them. We were meant to feel sorry for the banks. But then we could make a good case for there being a cost for shops handling cash – purchasing and maintaining cash registers and safes, plus for some the fees to employ security forms to collect cash and “bank” it.
in my view vendors should accept the cost of processing of whatever payment method the buyer chooses as part of their cost of sales. I simply don’t believe these fees are anything more than an ingenious ruse to exact a little more out of us when we buy something.
And then there’s another thing. Julian’s article says that the new measures should “end this appalling situation by the end of next year”. Well, why not now? Then it really would be a Happy Christmas!
As someone who has to use Ryanair frequently – they have a monopoly on a route that I use for family reasons, I would welcome something that stops them putting on extra charges that only a very small minority of customers can avoid. Booking and checking in on the web is what they want you to do, but they apply the credit or debit card surcharges separately to every leg and every passenger. It would be easier to justify if there was one charge per transaction or a percentage charge. It’s just another way to widen the the differential between the advertised price and the actual or typical cost. Other airlines do similar things but Ryanair do it more and most blatantly.
I don’t have a quarrel with what Ryanair sells, but my family has so much experience of them now that they rarely catch us out. (We’ve even got several refunds from them over the years.)
So anything that clips their wings (!) in this respect is welcome. Best done at European Union level, but if the British government or even Essex County Council or Uttlesford District Council can bring them to heel quicker, I’ll cheer.
They wouldn’t be Ryanair ( a leader in the world of cunning businesses) if they didn’t have several more cunning plans in the pipelines (Michael O’Leary seems to relish the role of Pantomime villain.) But they’ll have to be dealt with as they emerge.
Next stop – utility companies, including BT, who charge you a fee for posting them a cheque. (No, I don’t want to risk extra bank charges by giving them a direct debit mandate.)
@Nigel – ssshhhhh, keep it quiet or the Tories will vote against it.
When is this supposed to start? I have just received my renewal for road tax and guess what the Government wants to charge me £2.50 for using a card. Pot, kettle black comes to mind.