Hidden card charges rack up costs for consumers

Paying by card can increase costs by up to 200 per cent, according to new research from Which? Money.

Hidden charges mean that flights, cinema tickets and trains cost people a lot more than they bargained for; whether a surcharge is added as a flat fee or as a percentage of the cost, the consumer pays more.

Paying for a £19,000 Saga cruise by card for example, would cost £470 in surcharges and a £1.70 ticket bought from thetrainline.com costs an extra £3.50 paying by card - an increase of 200 per cent.

When questioned, most retailers cite card processing costs as a reason for the surcharges. But Which? Money found that the ‘merchant service fee' banks charge retailers is typically 0.1p for debit cards and 0.8% for credit cards - a lot less than the 5% and 3.5% that some companies charge for paying by each type of card.

Which? Money found card surcharges were most prevalent in the travel industry. Many airlines have increased surcharges since 2009, and some levy card fees per item rather than per transaction, even though banks treat a return ticket as one transaction.

Which? chief executive, Peter Vicary-Smith says: "People don't like card surcharges and it's no surprise when the costs they pay don't match those incurred by the retailer.

"There can be no justification for high card surcharges as all too often they just seem to be an excuse for ramping up costs. While companies may want to recoup merchant fees, these charges need to be fair and transparent, so consumers know the real price before they begin a transaction."