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

It costs Ryanair 20p to process a debit card transaction, yet they charge £5 per ticket per person for it. And they're not the only ones milking the 'transaction fees' cow - companies everywhere are doing it. But that may be about to change.

By Ruth Jackson-Kirby

Published 21 February 2011 In Features

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?