£1billion stealth fee racket
Thought the new ban on credit card surcharges would end rip-offs? Some hope! Today, we reveal shoppers still face a . . .
WHEN fees for spending on credit cards were banned on Saturday, it was hailed as the end of a rip-off that meant shoppers were shelling out millions of pounds just to spend their own money.
But today, Money Mail research reveals firms are already using a raft of other stealth fees to hike the price at the checkout.
We found customers are being charged a whopping £26 in booking and delivery fees on a single ticket to a pop concert.
They also face paying up to £2.75 a time to use a cash machine, and more than £5 for a family meal in a restaurant abroad.
In some cases, fees of 50p or less for administration are going unnoticed as they’re buried in the small print of the company’s terms and conditions and given woolly names such as a ‘processing’ or ‘convenience’ fee.
Overall, the fees cost customers an estimated £1billion a year on top of the headline price of their purchase — dwarfing the £473million lost to card surcharges before the ban.
And now, experts are warning admin fees could become even more commonplace as firms try to claw back the money they once earned on card fees.
James Daley, founder of consumer website Fairer Finance, says: ‘It is insulting that customers are being charged simply for the privilege of handing over their own money.
‘Often, these fees are not very apparent to customers, but the world of payments can be very complex and some companies exploit this.’
Among the biggest money spinners for firms are booking fees, which are added on top of the face value of an event ticket.
Customers are reeled in with a cheap headline rate, only to be hit by a host of extra charges by ticket companies, theatres and entertainment venues.
Online ticket revenues are projected to hit £2.59billion this year in the UK, according to consultancy Statista. Industry insiders reckon that around £250million of this is made up of extra fees.
In some cases, customers are hit by a number of small fees for processing, delivery and payment handling.
Other venues whack an extra 10 to 12 pc on to the upfront cost of a ticket.
Ticket firm Seatwave adds £15.99 to the cost of a £79.53 ticket to see girl band Little Mix in Hove in July. It also charges a £9.99 delivery and handling fee.
Its parent company, Ticketmaster, adds £3.95 on to the cost of buying a £37.50 ticket to the X Factor Live concert in Belfast. The firm says the charges are often its only source of revenue for delivering these services.
SOME venues will hit customers with charges even if they pay for their ticket in cash and in person. These include Swansea City football club, which now imposes a £2.50 fee for tickets bought in person. From Friday, if you book online, it will charge £1.25.
Many West End theatres also charge a restoration fee, typically £1 a time, that’s supposed to cover the upkeep of the old Georgian and Victorian buildings.
But critics have warned these charges are not being used for their advertised purpose in some cases and should be questioned.
Andrew Thomas, principal at ticket industry consultancy The Ticketing Institute, says: ‘These booking and processing fees are ludicrous. You would not be charged an extra payment fee to buy a loaf of bread at Tesco — why should you have to pay for the privilege of buying a ticket?’
Some new online firms charge so-called convenience fees, which are common in the U.S. RingGo, which lets drivers pay for parking spaces online or over their phone, charges a convenience fee of 20p a time in some of its hundreds of car parks around the country — although it says car park owners can decide whether or not to apply the charge.
It says the fee partly pays for storing the customer’s data.
Online takeaway firm Just Eat imposes a 50p service charge for processing an order, regardless of how you pay.
Shoppers also face hefty fees for withdrawing cash. Around 15,000 of the UK’s 70,000 ATMs charge for withdrawals. These are often positioned in corner shops and garages. The average fee paid by customers at these machines is £1.70, with an average withdrawal of £69.
But the most expensive fees are charged by temporary cash machines at events. At last year’s Glastonbury Festival, customers would have seen a £2.75 charge each time they used a debit card.
Taking out cash on a credit card costs around 3 pc, often with a minimum £3 fee — even though fees have been banned if you use the card in a shop.
According to Money Mail calculations using official figures, customers spend £140 million a year to access their own money.
It is feared that the number of fee-charging machines could grow as banks close branches and ATMs outside. A row about running costs has also put around 10,000 free-touse cash machines at risk.
Meanwhile, banks are guilty of clobbering customers who use a bank card overseas. In some cases, they take as much as £2.25 for getting €10 from a foreign ATM.
Banks also typically impose complex charges every time you use your card to pay in shops and restaurants abroad. These can be up to 2.99 pc of the value, with a second fee often fixed at £1 or £2 for purchases, adding up to £4.99 to the cost of a £100 family meal.
Holidaymakers lose an estimated £800million a year to these fees, according to research by currency firm FairFX.
A UK Finance spokesman says: ‘Operating an international system that can send a payment from an account in the UK to retailers across the globe does have a cost.
‘While fees will vary between card companies, all banks will display any charges on their website.’
Following Saturday’s credit card fee ban, consumer expert Martyn James says: ‘There is a sense of outrage among some firms that their source of easy cash has been snatched away. We are bound to see a host of firms applying more stealth charges in future.’