Government not to ban surcharges for paying with Credit Cards

Hi Brendan...do you believe the charges levied by companies like Ryanair are unfair? Myself and a friend discussed this at length yesterday on a Ryanair flight. Most merchants pay approximately 1.75% to their merchant service provider but a company like Ryanair would have the clout and turnover to negotiate a much better rate, something closer to 0.5% I would guess. As their average fare is in the €60-€70 range that's about 33c per customer. This bears no relation to the charge levied by Ryanair or similar companies. Why do you not believe a ban would be a positive move?
 
I think one of Brendan's argument in favour of surcharges being allowed was that customers would have the choice of whether to pay for goods or services by other methods, i.e. cash or Debit/Laser Cards, thereby allowing the customer to choose cheaper methods of payment.

I have had an experience recently, which was discussed here.

Basically, I was charged a 3% surcharge by the on-line Holiday site www.1800hotels.ie for paying by Visa Debit Card, same as for a Credit Card. There was no charge for Laser Card Payments.

I took this up with Halifax, the card issuer.

This is the correspondence:

 
With Ryanair though, is there an alternative to avoid the credit card fee? I can't rock into the office and pay cash or pay by bank transfer...do people with that Ryanair credit card get charged the fee? I'd prefer to see a cap of 2-2.5% put on these charges. It should cover the retailer's cost but no more. Then, if they can negotiate a better deal with their merchant service provider there's a little bit of jam in it for them which I wouldn't have a problem with.
 
ClubMan said:
If there isn't then presumably there are alternative airlines if you don't like the way that they charge for services?
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Sometimes there isn't though. And that sort of 'like it or lump it' attitude is typical of Ryanair. The levy for using your credit card is a disgrace and to suggest otherwise is bizarre.
 
The Government is right not to interfere in the market in this way.

There are more important issues to be tackled, and there are too many laws as it is, many of them unenforced and/or unenforceable.
 
John Rambo said:
The levy for using your credit card is a disgrace and to suggest otherwise is bizarre.
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Businesses are free to charge what they see fit and what the market will bear for services and for the cost of doing business. It's neither a disgrace for them to do this nor bizarre to suggest that this is not necessarily objectionable.

ubiquitous said:
The Government is right not to interfere in the market in this way.

There are more important issues to be tackled, and there are too many laws as it is, many of them unenforced and/or unenforceable.
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Totally agree.
 
Senator Fergal Quinn writes an interesting piece in today's Irish Times [broken link removed] (registration required) saying that surcharges are in the customers' interest.


He goes on to call for action against the Credit Card companies' charges to retailers.

Brendan
 

I find Senator Quinn's arguments ridiculous to be honest but not unsurprising given his retail background. The corner shop is probably paying 2% to their merchant service provider. Companies like Ryanair or Superquinn, given their huge turnover levels, have to be paying somewhere in the 0.5% region. I am guessing but it must be in and around that figure. I would have no issue if the credit card surcharge compensated the retailer for that small percentage but I do have an issue with companies like Ryanair using it as a profit making device. What reinforces this point is the lack of an alternative method of payment. I would happily pay Ryanair or whoever electronically or even send them a cash or cheque. I believe the government should intervene and cap these charges at 2.5%. That compensates the retailer and means there's jam available for those retailers with the clout to negotiate their percentages down with the banks.
 
Can't argue with that. But people making assertions that visa charge 2% are not correct.
 
bond-007 said:
Can't argue with that. But people making assertions that visa charge 2% are not correct.
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It's a bit pedantic to say incorrect...I mean what would you say the average is? Retailers are charged a wide variety of different rates. For example, I negotiated a rate of 1.45% a couple of years ago for a business with a turnover of around €1.1 million. That's not particularly big. Anyway, regardless of the maximum figure I feel the charge to consumers should be capped so retailers don't lost out but equally consumers aren't being taken for mugs.
 
I would suggest a sign saying "We are charged 2.5% by our bank for credit card transactions" being on display.
 
There is an alternative way to bill things, they could price items the same for everybody but give a discount if you pay by cash/laser and Ryanair et al could do a minus if you don't have any bags. The Minister could insist that all retailers take laser (no charges with laser I believe) as well as credit cards, why not?
 

A fair point...the only issue with Laser is the c.30c charge levied on the retailer, hence the imposition of the €10 minimum purchase by most retailers. In my experience Laser was the best method of payment for the retailer as the banks charge for counting cash and obviously the credit card companies charge their percentage.
 
I have no difficulty with the gov not getting involved here. Once the shop/business clearly displayed the extra cost I'm fine with it as a lot of other people ill be I suspect.

I was in a shop 2 weeks ago which use to charge you for using laser for amounts under €5. They upped this to €20 and even when I said I have cash back - no deal.

They have since put up a sign and now I just make sure I have cash on me when I go this shop. Prefer to get the cash rather than have the shop increase their prices overall so as not to charge customers for using cards.

Hopefully the queue will move quicker with more of us using cash.
 
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