Wednesday, 29 June 2011

Pay in order to pay - EU intends to ban fees for paying by credit/debit cards

One of the changes that the new Consumer Rights Directive will hopefully bring into the European consumer law (according to the text of Recital 54 of the draft by the European Parliament of the 23rd of June 2011) is a prohibition for the traders to put excessive surcharges on consumers for making payments by use of debit or credit cards online. Recital 54 points out that according to art. 52(3) of Directive 2007/64/EC on payment services in the internal market the traders could only put such fees on consumers that would compensate them their own cost for enabling such payment methods to consumers.

Introduction and enforcement of this rule would be a welcomed change by all consumers, consumer and fair trading organizations. Anyone who ever tried booking a ticket for a flight online or a train/ bus ride knows that at one point in your booking process you come to a website that adds more to your final price due to the consumer choosing to make a payment via a debit or a credit card. However, consumer's 'choice' is illusory, since often the service provider makes debit/credit card payment an only viable option. If the service provider charged the consumer for use of a debit/credit card accordingly to the cost that it had to make himself, that would be an understandable and reasonable addition to the price of the service (though, still, it could be indicated to the consumer at the beginning of the purchase process). However, the service providers often charge consumers amounts that are not reflecting the actual cost of payment by the financial means being used. As a result, service providers benefit additionally from these extra fees, and consumers are being misled as to the final price they would have to pay for the service. Hopefully, the new European regulation would lead to the introduction of a ban of such practices in all Member States.

More on such practices and problems with their regulation in UK can be found in recent articles on the OFT website (OFT to take action over passenger travel sector payment surcharges after the consumer rights group Which? logged a complaint about these practices with OFT earlier this year), in the Guardian (Debit and credit card surcharges under OFT microscope), Mail Online (Budget airlines told to stop 'unfair' fees on debit cards by OFT), Sky News (Travel Firms Ordered to Scrap Charges). As you can see it's quite a 'hot' subject at the moment.

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