Huppert calls on government to act against credit card surcharges
December 22, 2011
Cambridge MP, Julian Huppert has called on the government to take action to protect shoppers from credit and debit card surcharges as internet shopping grows.
He secured a debate in the House of Commons, entitled 'Credit and Debit Card Surcharges', in order to highlight the problems people face with these hidden costs.
These surcharges have become a business model in their own right, he said, seriously undermining legitimate economic growth.
And he warned that if the government failed to act, it risked stifling the country’s fragile economic recovery.
Julian said that a recent study by Which? magazine found that in 2004 the low cost airline, Ryanair charged its customers 80 pence to pay by debit card. Now passengers have to fork out £12 just to pay for their flight, he said.
“If Ryanair’s surcharges have risen 15 times in seven years, just think what such charges will do to economic growth across the country as we pull ourselves out of recession,” he said.
“When consumers choose to buy something, they do so in the belief that the price is fair and that they have got a good deal. So when hidden surcharges are added at the end, consumers come away feeling wronged and the incentive to buy is greatly reduced.
“That is compounded by the fact that businesses are incentivized to think of new ways to get away with hidden costs, rather than delivering desirable products or services at the cheapest possible price. Prices go up and innovation is throttled, harming society as a whole.”
He added that in November retail sales were down by 0.4 per cent but, with more and more people shopping on the internet with credit and debit cards, online shopping was up 2.4 per cent.
A recent study by the Federation of Small Businesses estimated that online trade will represent 10 per cent of gross domestic product by 2015, he said.
“If the government also hopes to eliminate the structural deficit by roughly that year, they would do well to pay close attention to internet shopping,” he said.
“Hidden costs harm confidence and skew the market away from productive enterprises, but they are also inherently unfair and damaging to a free and open society,” he added.