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Credit card charges making huge profits for travel companies

Published: 07/10/2010 by Comments

Businesses in the travel industry are turning large profits from imposed credit card surcharges. Airlines, ferries, rail Companies and hotels alike are imposing massive processing fees of as much as five percent on goods and services purchased with credit cards. Processing fees through banks are around 10p.

Customers who pay for travel accommodations with credit cards will pay excessive fees. In contrast, many of the same companies do not charge for prepaid credit cards or Visa Electron. Even though prepaid debit and regular bankcards require electronic processing also, only credit cards bear the surcharges.

In a report by Which?, a consumer banking champion, if a consumer books a flight for four people on Ryanair, using a credit card, the consumer will be charged an extra £40 as a processing fee. Ryanair would then pay the bank 10p and the remainder of the surcharge is added to the company’s profit. Visa Europe as well as many banks have condemned the practice and are opposed to the excessive charges.

Peter Vicary-Smith, Chief Executive Officer of Which?, complained saying “there is no justification for companies lining their pockets by charging high transaction fees.” He also noted in his statement that the already extensive charges continue to increase steadily. Vicary-Smith used Monarch Airlines as an example citing the £3.30 increase on a £300 ticket.

According to the United Kingdom Card Association, retailers are not required to offer customers a payment method free of charges. In countries, like Italy, France and Sweden, it is illegal for retailers to charge any surcharges.

Processing fees vary from retailer to retailer. Consumers are urged to first off, read the small print before paying at any retailer with a credit card. Secondly, to avoid these fees all together, consumers should use an alternate form of payment.

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