Retailers' surcharges for paying by credit or debit card

Name of complainant: Which?
Date of complaint: 30 March 2011
Date of publication of the OFT response to complaint: 28 June 2011

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Subject of complaint

Which? identified three features which it thought resulted in consumer detriment, in the passenger transport sector:

• a. Lack of transparency. Surcharges are often only revealed towards the end of a lengthy transaction process and so it can be difficult to compare prices across competing retailers
• b. Lack of a reasonable, practical alternative to avoid the fee, and
• c. Surcharges often appear to exceed reasonable estimates of retailers' costs of processing payments.

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OFT response

The OFT considers that payment surcharges are most likely to result in consumer detriment where they lack transparency and where consumers lack a practical way to avoid the surcharge, as the surcharges reduce the extent to which consumers shop around and compare full price offers. This weakens the competitive pressure between retailers and can result in consumers not getting the best deal.

We believe that making the headline price more meaningful for comparisons and ensuring information on surcharges is provided in a clear and timely manner would help consumers avoid surcharges and encourage competition between retailers, driving down the price of genuinely optional surcharges.

To address the concerns raised in the super-complaint we are recommending that the Government introduce measures to prohibit retailers from surcharging for debit cards to ensure a meaningful and consistent solution across the economy.

In the meantime, to tackle individual retailers whose practices we consider are resulting in significant consumer detriment, we will also seek to improve the presentation and transparency of payment surcharges in the passenger transport markets by taking action to ensure compliance with the Consumer Protection from Unfair Trading Regulations 2008.

We have re-published the original super-complaint response document. Following our consultation and in finalising this report, some text was deleted from Annexe C so that minor details were consistent with the views of the OFT as regards its investigations of the UK domestic interchange fee arrangements for MasterCard and Visa payment cards. In consequence, the numbering of some footnotes has been altered. None of the changes materially affected the OFT’s findings in this report or its decision not to make a Market Investigation Reference to the Competition Commission.

• Read the OFT's response to the Which? super-complaint (pdf 744kb)

The OFT has taken the decision not to make a Market Investigation Reference (MIR) to the Competition Commission in response to the super-complaint. We invite views on this proposed decision and ask interested parties to submit responses to this consultation by 5pm on Tuesday 6 September 2011, either by email to surcharge.supercomplaint@oft.gsi.gov.uk, or in writing to:

Surcharge Super-complaint (6th Floor)
Office of Fair Trading
Fleetbank House
2-6 Salisbury Square
London
EC4Y 8JX

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Related items

• The OFT has opened an investigation into its concerns about the transparency and presentation of payment card surcharges, September 2011
• See press release OFT to take action over passenger travel sector payment surcharges, 28 June 2011 
• Surcharge questions and answers 
• Advertising of  Prices Study, December 2010
• See press release, OFT receives super-complaint from Which? 30 March 2011
• See Which? Super-complaint document: Super-complaint: credit and debit surcharges, March 2011
• Following recommendations made by the OFT, the Government announced plans to bring forward legislation to tackle excessive card surcharges.

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Contact details

Interested parties can submit their written views to surcharge.supercomplaint@oft.gsi.gov.uk

Senior Responsible Officer: Cavendish Elithorn (020 7211 8170, cavendish.elithorn@oft.gsi.gov.uk)

Project Director: Laura Phaff (020 7211 8701, laura.phaff@oft.gsi.gov.uk)

Team Leader: Pauline Goodship (020 7211 8335, pauline.goodship@oft.gsi.gov.uk)

Back to: Super-complaints