Should credit card surcharges be banned ?
YES:
From the outset, let me clearly state that there must be no doubt that credit card surcharges are, in the mind of any reasonable-thinking person, anti-consumer, discriminatory and they must be removed. Those retailers who add their costs to their "valued customers'" bills suggest that they do so only to recoup the service charge that they pay to the credit card companies as a percentage of the sale. They are doing no more, they cry, than passing on a financial burden that is just too much to bear in these difficult times.
What they never comment upon are the significant savings they make in cash handling, security provision, human resources and insurance costs by card transactions. They utter no word regarding the reality that consumers use their own time, equipment and at their own cost to book online and then pay additional surcharges for no new return and therefore no reason. Why is it that in an environment where one can only pay by credit card (for example, when booking flights online), that the same ridiculous charges are added? Moreover, why have they been tolerated? Well, for a few reasons actually.
Originally it was clearly intended, and legally provided by the "no-discrimination" rule, that retailers should not pass on their transaction charges as an addition to the consumer's purchase price for goods and services. Then, by way of derogation from that norm, at national level, Statutory Instrument No 103 of March 4th, 1997, (SI 103) allowed the promoters of concerts and other events to add a charge to the ticket price - as long as this additional charge was advertised or notified to the purchaser in advance. Over time, this has given rise to what is generally known as a surcharge or handling fee which, in the main, arises on bookings/purchases made by credit card.
More recently, MasterCard's legal challenge at the EU level led, in 2005, to the removal of the "no discrimination" rule and opened the way for more passing-on of charges by retailers. It is noteworthy that the rule is still applied by Visa International.
Any consumer booking a holiday in recent years will have forked out a quite significant sum of additional money if paying by credit card. Yet, if they had opted to pay by cheque, cash, beads or blankets it would have cost them less. So now we have a very mixed and confusing marketplace for the consumer. In what has been a classic bandwagon-jumping exercise, we now have ever-increasing numbers of retailers and service providers who clearly fall outside the scope of SI 103 and who make no discrimination between MasterCard or Visa cardholders, who have taken to imposing surcharges. These are termed service charges, booking fees, administration fees and a whole plethora of similar augmentations to what are simply additional monies being demanded from customers because they used their credit cards to pay. Such a charge is not imposed in respect of other forms of payment.
What is significantly worse is that, when you consider how few consumers can actually afford to pay off their credit card bill at the end of the month, you begin to see the outlandish situation where interest is being paid on top of these surcharges.
The Consumers' Association of Ireland wrote to Minister Micheál Martin in May 2006, detailing our discussions with the Irish Bankers' Federation and the Financial Regulator and outlining our collective concerns regarding the negative impact these charges were having on consumers and the market.
This has nothing to do with competition. It most certainly has nothing to do with cash management any longer. Every positive element in that field has been obliterated when it comes to consumer benefit and customer relations and it is high time that we woke up to that reality and put a stop to it.
Hopefully, the responses to Mr Martin's consultation on this matter, within the provisions of the Consumer Protection Act, 2007, will recognise this reality. It must do so for two reasons. Firstly, there can be no doubt but that the industry will lobby hard to retain these charges, even at EU level. Secondly, because it is long past the time for Irish consumers to stand up and demand an end to unfair terms and unrealistic charges.
This move to extract even more money from consumers, for no return, now clearly indicates how skewed and unrealistic this activity has become in its solely profit-driven focus and mission. While the regressive nature of such surcharges will come as a shock to some, it is the calculated intention to bleed the customer dry that more readily reflects today's mindset, and which dictates how determinedly we must resist these surcharges and outlaw them.
Dermott Jewell is chief executive of the Consumers' Association of Ireland.
