Byline: Jo Thornhill
Dealing with a [pounds sterling]200 credit card sale costs a business [pounds sterling]2. So why are we surcharged up to [pounds sterling]10 by airlines, train companies, ticket agencies and utilities among others?
The issue is on the radar at the Office of Fair Trading after lobby group Which? launched a 'super-complaint' this month, claiming that the charges are far higher than the true cost to the retailer of processing the transaction.
The cost of handling card payments varies with the size of the company or retailer and the fees charged by the payments giants such as Visa and MasterCard. Typically, costs are between one and 2.5 per cent of the transaction for credit cards and pennies for debit card sales.
But many companies have boosted card payment charges dramatically, sparking accusations that they are simply pumping up profits at the customers' expense.
For example, experts estimate it costs an airline such as Ryanair about [pounds sterling]2 or [pounds sterling]3 for a credit card booking of [pounds sterling]200. Ryanair's best-buy fares start at [pounds sterling]8, but a credit card fee of [pounds sterling]5 for each ticket for a family of five buying return fares rakes in an extra [pounds sterling]50.
Even after adding Ryanair's notorious 'extras', this fee could still come in at 20 per cent of the total price. Which? claims this makes it difficult for customers to know what they are paying until late in the purchase process.
Airlines are not the only offenders. Ticketmaster, a leading concert, sport and theatre ticket retailer, charges over ten per cent on some bookings.
Credit cards are popular for large transactions such as flights and holidays because of the extra insurance. Payments of [pounds sterling]100 or more are also covered by the Consumer Credit Act, so cardholders can recover their money if an airline or travel company goes bust.
The UK Payments Association says a review into surcharges is long overdue. Financial Mail has assessed the charges readers have complained about most and we explain how to avoid the sting, where possible.
TICKETMASTER
THE agency takes a 'service charge' for each ticket and a 'processing fee' for each booking order.
The fee varies with the event, venue, promoter and producer, but is levied regardless of the type of card. The average service charge is nine per cent of the ticket price. For some concerts, it can be as much as 11 per cent.
Ticketmaster says the fee is for marketing, technology, operational support and payment processing.
How to avoid paying: You can't. Clementine Critchlow, 26, a teacher from Clapham, south London, bought two tickets from Ticketmaster for the Glee Live concert as a Christmas present for her sister, Abigail, 29. They will go to the show together at the O2 Arena in June.
But Clementine was shocked by the [pounds sterling]7 surcharge, which adds up to more than five per cent of the [pounds sterling]129 ticket price. 'The tickets are expensive, so I was aggrieved to be hit with such a big fee for buying online,' she says.
'Surely the charges should be reduced because I'm buying over the internet, which means lower costs for companies? There should be more justification for charges and exactly what they cover - it isn't transparent.'
RYANAIR
THE budget airline takes a [pounds sterling]5 flat fee per person per one-way journey for those paying by debit or credit card.
How to dodge the fee: There is no charge with MasterCard prepaid debit cards. Prepay cards are loaded with cash in advance, but there are usually other fees, such as set-up charges, monthly fees or fees to load the card, depending on the provider.
EASYJET
ALL bookings incur a [pounds sterling]5.50 fee per person. Credit card payments trigger an extra 2.5 per cent charge for the total transaction value, with a mini-mum of [pounds sterling]4.95. The total for a family of four paying [pounds sterling]150 per return ticket by credit card would be 637.55.
How to get around the fee: There is no booking fee with Visa Electron, a rarely issued debit card available only with Halifax or Bank of Scotland basic accounts.
A Halifax Easycash account could be opened for the sole purpose of getting a Visa Electron card, but it is a cumbersome process and is worthwhile only for regular flyers.
Those with a French bank account who have a Carte Bleue - a debit card that allows transactions without authorization from the bank - can also buy easyJet tickets without the surcharge.
Property developer Tony McGorrigan, 57, from Bristol, owns a property in Corsica and has a Carte Bleue with his French bank account. He flies to Nice about five times a year to get a connection to Corsica. 'EasyJet is usually the cheapest airline but its high card charges really annoy me,' he says. 'I recently bought a single ticket from Nice to Bristol for 79 euros [[pounds sterling]67] and easyJet was about to levy a 12.50 euros charge.
'I used my Carte Bleue and was able to avoid the fee, but I know other consumers in the UK cannot get around it. I think the regulators should crack down on companies profiteering in this way.'
BMI BABY
PAYMENT by debit card is charged at [pounds sterling]3 per person per one-way ticket with a minimum payment [pounds sterling]4. Credit card bookings are charged at [pounds sterling]4.50 per person per one-way ticket, minimum payment [pounds sterling]6.50. The total charge for a family of four paying [pounds sterling]150 per return ticket by credit card would be [pounds sterling]636.
Ways around the fee: Pay with Visa Electron. David Deacon, 71, from Market Harborough, Leicestershire, is upset at credit card charges by low-cost airlines.
David, a retired factory production manager, is travelling to Alicante this year with his wife Alice and two friends. They want to travel from East Midlands airport and bought flights with BMI Baby, but David was shocked at the [pounds sterling]36 surcharge on the [pounds sterling]500 cost.
'I booked all four tickets using my credit card,' he says. 'I was staggered at the charges. BMI Baby levies a charge for each leg of the journey for each passenger. This seems excessive. I think it is wrong to show a flight price on the website, only for customers to find out at the payment stage that the amount actually charged will be much higher.'
JET2
THIS airline charges a 3.5 per cent (minimum [pounds sterling]4.99) booking fee plus a further 3.5 per cent for credit card bookings. Payments by PayPal, the electronic payment system, are charged at 1.5 per cent.
The total charge for a family of four paying [pounds sterling]150 per return ticket by credit card would be [pounds sterling]642.70.
How to dodge the fee: MasterCard Solo or Visa Electron. Solo is similar to Electron and is offered with some basic bank accounts.
BRITISH AIRWAYS
THE flagship airline charges a [pounds sterling]4.50 flat fee per ticket for credit cards. There are no other booking fees. Debit card payments have no charge. The total charge for a family of four paying [pounds sterling]150 per return ticket by credit card would be [pounds sterling]618.
Ways to get around the fee: Pay with a debit card.
MONARCH
BOOKING fees of 3.5 per cent on the total transaction apply on all payment methods except Solo and Visa Electron. Credit card payments are charged an extra 1.5 per cent, making a total of five per cent of the transaction. The total for a family of four paying [pounds sterling]150 per return ticket by credit card would be [pounds sterling]630.
Ways to get around the fee: No fee with Solo or Electron.
FLYBE
ALL transactions are charged booking fees at [pounds sterling]4.50 per person per oneway journey. A credit card supplement of 50p per person per one-way journey is also charged with a minimum payment of [pounds sterling]1. Total for a family of four paying [pounds sterling]150 per return ticket by credit card would be [pounds sterling]640.
Ways to get around the fee: No fee with Visa Electron.
UTILITIES
MANY gas, electricity, phone and broadband providers effectively force customers to pay by direct debit by making the option of paying monthly or quarterly by debit or credit card more expensive.
TalkTalk, for example, will not sign up new customers unless they set up a direct debit. Virgin Media, while not charging a set fee for debit and credit cards, slaps a [pounds sterling]5 a month surcharge on bills for customers who don't pay by direct debit.
BT charges [pounds sterling]4.50 a quarter for customers who don't pay by direct debit while Sky adds 50p a month for those who pay monthly by credit card.
EUROSTAR
THE train operator takes a [pounds sterling]4 flat fee on credit card bookings over [pounds sterling]30.
Ways to avoid the fee: Pay with a debit card.
THETRAINLINE.COM
THIS agency takes a [pounds sterling]1 booking fee on all transactions and a [pounds sterling]3.50 flat fee on credit cards.
THE GOOD GUYS Not everyone rakes in extra profits by loading up charges
NOT all travel companies feel the need to their profits with inflated card payment charges. Virgin Trains, for example, does not charge booking or card payment fees.
Unlike most travel companies, Trailfinders does not charge customers who pay by credit card. This is in contrast to Saga and Thomas Cook online, which both charge 2.5 per cent for credit card payments, capped at [pounds sterling]50 with Thomas Cook. The fee is reduced to one per cent with Saga if customers pay with a Saga Platinum Visa.
A number of airlines, including Cathay Pacific, Delta, Continental, Emirates, American Airlines and Qantas, do not impose credit card fees. Ferry companies Condor, Wightlink and Superfast Ferries do not charge to use a card.
Most supermarkets and High Street shops absorb the costs of card transactions into their prices. Ikea used to charge 70p to customers paying by credit card but scrapped it last July after consumers complained.
Mike Gooley, the owner of Trailfinders, believes it is misleading to advertise a price, only for the customer to find there are numerous surcharges - say for checking-in baggage, reserving seats and then an extra fee for paying by credit card - as they work their way through the booking process.
Instead, Trailfinders builds these costs into the total price so that the bill should be clearer and fairer for consumers.
'It is general but poor practice that fares and holiday prices are advertised without informing customers that credit card charges apply,' says Gooley.
CAPTION(S):
ONE CARD TRICK: Tony McGorrigan uses a French debit card to avoid fees but Clementine Critchlow had no such option
GOING UP: David Deacon was shocked at card surcharges by airline BMI Baby
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