Could it soon be the end for 'transaction fees'?

By Staff Writer Ruth Jackson Feb 21, 2011

Ruth Jackson

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Amidst the gloom of rising inflation, there could be some good news on the cards for consumers. Which? has announced that it is going to launch a complaint in March against the surcharges many companies impose when customers pay with a debit or credit card. It hopes to force the Office of Fair Trading to investigate.

Which? has already named and shamed Ryanair as one of the worse examples of a company profiting from debit and credit-card transactions. It claims that processing a debit-card transaction costs only 20p, yet the airline charges £5 per ticket per person. That means a family of four ends up paying an extra £40 for a holiday to cover a 20p cost.

To make matters worse, the fees are rising. Research from Travelsupermarket shows that Flybe has increased its minimum credit-card fee from £4.50 to £5.50 and Jet2's debit-card fee has risen from £2.99 to £4.99. "There's simply no justification for excessive card charges – paying by card should cost the consumer the same amount that it costs the retailer. Companies should not be using card-processing costs as an excuse for boosting their profits," says Which? chief executive Peter Vicary-Smith.

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It's not just the airlines that are pocketing fat fees this way. Websites selling tickets for anything from sporting events to the ballet have jumped on the bandwagon with 'transaction fees'. Currently they all get away with it as long as they have one form of plastic that is free of charges. But in order to maximise their profits, many of these companies select a form of payment that almost no one uses. For example, Ryanair doesn't charge a transaction fee if you pay with a Prepaid Mastercard. How many people carry one of those?

An end to this practice can't come too soon. Inevitably, the firms that benefit will fight any change and find new ways to part you from your cash. Maybe Ryanair's Michael O’Leary will finally press ahead with his plans to charge customers to use the inflight toilets.

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Published in Personal finance | More articles by Ruth Jackson

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  • 1. Ben Sladen

    (22 February 2011, 06:23PM)  Complain about this comment

    I understand that Ryanair now charges £1 to use the on-flight loo!!

  • 2. Stevie

    (22 February 2011, 09:01PM)  Complain about this comment

    We're fortunate enough to be going on holiday soon to Kenya. Our Hotel apparently charges 5% of the total cost of your bill if you pay by Credit card!! ............Rip off or what!!!

  • 3. Annie

    (23 February 2011, 12:11AM)  Complain about this comment

    If Ryanair charge for using the loo I think their planes are very soon going to start to smell like old people's homes as the passengers try to hold on (and fail) until the plane lands. Or is this rumour just another example of "there's no such thing as bad publicity"?

  • 4. jt

    (23 February 2011, 09:53AM)  Complain about this comment

    Ryanair charge £5 not per ticket but per flight, so a return ticket charge is £10 despite that's only one ticket.
    Although they state no charges for a Visa Electron card but none of the high street banks issue these. A friend from Poland had a specified card but it was not acceptable to Ryan because the personal details were not printed in embossed letters but flat .
    BTW. Why are they allowed to advertise (and sell) cigarettes on board?

  • 5. John

    (28 July 2011, 01:52PM)  Complain about this comment

    The costs are unnecessary. As an ex banker fees for depositing cash have always been around originally to cover Securicor collection costs.

    It cost a businesses more to bank real cash than by using VISA!

    For Example a typical depositing transaction cost a business about 50p for the whole VISA transaction, where as depositing cash costs a business around 70p per £1000 they deposited.

    The idea of VISA was to help speed the process with lower costs. For businesses like Ryan Air blaming bank charges is scapegoating and lies.

    Banks are not entirely blameless though. Regulations should have been put in place to stop this type of scam. Banks are turning a blind eye to what they had created and it amounts to nothing but a criminal act of deception by companies such as Ryan Air.

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