Customers are being charged as much as 12 to use their cards when they pay, though the transactions cost as little as 20p to process.
In some cases, the surcharges are higher than the value of the item being purchased.
Last night a Treasury minister said people were “sick” of being “ripped off” by the hidden charges. Legislation would be introduced by the end of next year.External Hemroids are those that occur below the dentate line.
Mark Hoban, the financial secretary to the Treasury, said consumers should 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,” he 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. Consumers are sick of the rip-off culture and we are determined to do what we can to end it.”
Over the past few years, card surcharges have risen sharply particularly among low-cost airlines, who were among the first to bring in the levies.
The cost of booking a Ryanair return flight with a debit card has risen 15-fold to 12 since 2004.
The charges have now spread to many other areas including cinema tickets, utility bills, holidays and even some government departments. The DVLA and HM Revenue and Customs charge extra for credit card payments.
Consumer experts say Toyota levied a 75 fee to buy a car with a credit card. The fees are believed to cost consumers hundreds of millions of pounds a year.
In many cases, the charge is only disclosed during the closing stages of the booking process, making it difficult for consumers to compare prices.
Ministers intervened after Which?, the consumer watchdog, complained about the fees to the Office of Fair Trading (OFT), the regulator.
In June, the OFT found that the fees were detrimental to consumers and proposed that firms should be more open about the levies.
Richard Lloyd, the executive director of Which?, said last night: “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 Office of Fair Trading’s proposals, finally putting an end to these unfair charges. More than 50,000 people supported our 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.”
The European Union is to ban excessive card fees levied by airlines from 2014. However, the British ban will be enforced sooner and go significantly further. Earlier this year, Cavendish Elithorn, the senior director of the OFT’s Goods and Consumer Group, said: “The growth of internet retailing has brought massive benefits, but the increasing use of card surcharges is not one of them.
“You can’t buy online with cash and people are frustrated about being asked to pay for paying.
“Consumers find it harder to shop around and find the best deal if they have to invest time and effort in discovering surcharges. This also weakens competition between retailers which is bad news for the economy.”
Companies levying the fees have insisted that they are necessary to cover costs. All banks charge retailers a “merchant fee” for processing payments by debit and credit cards.
Most banks refuse to disclose the amount charged because it often depends on the size of the retailers and their volume of transactions. For example, large supermarkets will be able to negotiate smaller merchant fees. In addition, credit card payments cost more to process than debit card paymentsdue to the charges associated with borrowing.
There may also be extra security costs borne by the retailer in processing online card transactions.
According to regulators, the cost of processing a debit card is about 20p. However, it can be one or two per cent for credit cards.
A spokesman for the UK Payments Association said: “The credit card costs are per transaction.
“If you are booking six tickets at once, or one ticket in one credit card booking,Full color printing of plastic business cards, plastic card, the processing costs would be the same.
“It’s hard to see how companies can charge per item.”
The move to ban credit card fees is the latest action by government to crack down on unacceptable bank charges.
Earlier this week,Wholesaler of different types of Ceramic tile for your kitchen, the Office of Fair Trading ordered banks to stop charging consumers so-called foreign exchange fees when they use their bank cards abroad.
Banks had been accused of “charging customers for the privilege of taking money out of their own account”.
The move could save consumers millions of pounds a year.
The OFT has also waged a long-running battle against low-cost airlines to force them to disclose in advertisements and price comparison websites the actual cost of their tickets.
The low advertised prices have traditionally excluded a wide array of “hidden” fees and taxes which can significantly increase the cost of tickets.
Many low-cost airlines are thought to make the majority of their profits from the extra fees, including charges for luggage,checking in and other services which used to be free.
However, the ban on credit card fees is expected to be vigorously opposed.
Government officials are prepared to fight any attempts by airlines to avoid the bar.
In some cases, the surcharges are higher than the value of the item being purchased.
Last night a Treasury minister said people were “sick” of being “ripped off” by the hidden charges. Legislation would be introduced by the end of next year.External Hemroids are those that occur below the dentate line.
Mark Hoban, the financial secretary to the Treasury, said consumers should 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,” he 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. Consumers are sick of the rip-off culture and we are determined to do what we can to end it.”
Over the past few years, card surcharges have risen sharply particularly among low-cost airlines, who were among the first to bring in the levies.
The cost of booking a Ryanair return flight with a debit card has risen 15-fold to 12 since 2004.
The charges have now spread to many other areas including cinema tickets, utility bills, holidays and even some government departments. The DVLA and HM Revenue and Customs charge extra for credit card payments.
Consumer experts say Toyota levied a 75 fee to buy a car with a credit card. The fees are believed to cost consumers hundreds of millions of pounds a year.
In many cases, the charge is only disclosed during the closing stages of the booking process, making it difficult for consumers to compare prices.
Ministers intervened after Which?, the consumer watchdog, complained about the fees to the Office of Fair Trading (OFT), the regulator.
In June, the OFT found that the fees were detrimental to consumers and proposed that firms should be more open about the levies.
Richard Lloyd, the executive director of Which?, said last night: “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 Office of Fair Trading’s proposals, finally putting an end to these unfair charges. More than 50,000 people supported our 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.”
The European Union is to ban excessive card fees levied by airlines from 2014. However, the British ban will be enforced sooner and go significantly further. Earlier this year, Cavendish Elithorn, the senior director of the OFT’s Goods and Consumer Group, said: “The growth of internet retailing has brought massive benefits, but the increasing use of card surcharges is not one of them.
“You can’t buy online with cash and people are frustrated about being asked to pay for paying.
“Consumers find it harder to shop around and find the best deal if they have to invest time and effort in discovering surcharges. This also weakens competition between retailers which is bad news for the economy.”
Companies levying the fees have insisted that they are necessary to cover costs. All banks charge retailers a “merchant fee” for processing payments by debit and credit cards.
Most banks refuse to disclose the amount charged because it often depends on the size of the retailers and their volume of transactions. For example, large supermarkets will be able to negotiate smaller merchant fees. In addition, credit card payments cost more to process than debit card paymentsdue to the charges associated with borrowing.
There may also be extra security costs borne by the retailer in processing online card transactions.
According to regulators, the cost of processing a debit card is about 20p. However, it can be one or two per cent for credit cards.
A spokesman for the UK Payments Association said: “The credit card costs are per transaction.
“If you are booking six tickets at once, or one ticket in one credit card booking,Full color printing of plastic business cards, plastic card, the processing costs would be the same.
“It’s hard to see how companies can charge per item.”
The move to ban credit card fees is the latest action by government to crack down on unacceptable bank charges.
Earlier this week,Wholesaler of different types of Ceramic tile for your kitchen, the Office of Fair Trading ordered banks to stop charging consumers so-called foreign exchange fees when they use their bank cards abroad.
Banks had been accused of “charging customers for the privilege of taking money out of their own account”.
The move could save consumers millions of pounds a year.
The OFT has also waged a long-running battle against low-cost airlines to force them to disclose in advertisements and price comparison websites the actual cost of their tickets.
The low advertised prices have traditionally excluded a wide array of “hidden” fees and taxes which can significantly increase the cost of tickets.
Many low-cost airlines are thought to make the majority of their profits from the extra fees, including charges for luggage,checking in and other services which used to be free.
However, the ban on credit card fees is expected to be vigorously opposed.
Government officials are prepared to fight any attempts by airlines to avoid the bar.
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