27 January 2017

Red Card for Card Charges - a campaign roundup

Thomas Ridley Siegert

By Thomas Ridley Siegert LinkedIn

We've seen several major airlines respond to our campaign by scrapping their credit card fees. But we're not finished yet.

What’s the problem?

Five months ago Fairer Finance launched our Red Card for Card Charges campaign. We set out to challenge businesses charging unfair fees when customers pay by credit or debit card.

Companies which charge unjustified fees are breaking the rules.

Four years ago, new legislation banned companies from charging any more than the cost of processing a transaction. This stopped most businesses from charging for paying by debit card, but many continued to charge for using a credit card.

At the end of 2015, a European ruling then capped “interchange fees”, which make up the largest part of the costs of paying by card. These were capped at 0.3% of the value of each credit card transaction and 0.2% for debit cards.

While there are a few extra costs to add on top of these fees, our experts calculated these to be no more than an extra 0.3% for large companies. So we expected to see no companies charging no more than 0.6% for paying by credit card.

However, a number of companies continue to charge well above this – and in the worst cases, as much as 3%. Several major airlines were among the worst offenders.

What’s changed?

Virgin Atlantic and British Airways were the first of the big airlines to listen and respond to the pressure. Virgin scrapped their 1.5% charge, whilst BA changed their fee from £5 per ticket to 1% (a reduction for tickets lower than £500).

The biggest potential saving for consumers came from Monarch, which previously charged a credit card fee of 3%. This was the highest fee of all the companies we looked at. Monarch has now announced that it is going to scrap its fees entirely.

Jet2 followed suit shortly after by getting rid of fees for customers paying with American Express credit cards.

Meanwhile in the hospitality sector, Cottages.com kicked off the New Year by scrapping their 1.99% credit card charge.

What next?

A large number of companies are still charging credit card fees which we believe can’t be justified.

Flybe are charging 3%, RyanAir and Thomson Airways both charge 2%, and many councils such as Ealing, South Cambridgeshire, and West Dorset charge 2.5% for council tax payments made on a credit card.

These unjustified charges need to be stopped.

So please tweet about our campaign email the minister in charge of consumer affairs (Margot James), or even report the company to Trading Standards.

Help us continue the fight against this credit card rip-off.