2.5% charge on credit cards by DVLA and others - now should be scrapped

MiserlyMartin

DVLA's charge of £2.50 for paying your VED by credit is a rip off its against the recent EU directive and the governments own advice to companies. This charge can work out as much as 25 per cent car tax bill of the lowest rate bands.

You might remember a 'super complaint' to the OFT by consumer group Which? that resulted in the Treasury announcing a ban on these fees by the end of 2012. This came into force then last year some companies cut their credit-card fees after a European directive capped part of the wholesale cost of transactions at 0.3 per cent, reducing by about 0.5 percentage points the cost of processing payments. In Jan this year the government warned companies and public bodies that their charges should not be more than the cost of processing transactions.

Yet the government has failed to ensure its own departments follow this. I've found this freedom of information request which shows how they justify the charge but this was in 2010 before credit card processing fees have tumbled. Therefore by keeping the £2.50 charge, DVLA is involved in unfair profiteering from those who want to pay by credit card, especially those struggling with money doing a 6 month renewal.

Are there any plans for MSE or Martin Lewis to highlight this charge and do some campaigning on behalf on the public? Its not just DVLA, there are still some companies, including airlines, cinema operators and insurance companies charging fees of over 2% for payment by card!

There's no point in bringing out successive bans and regulations on this if it is never enforced!

PeacefulWaters

HMRC charge significantly lower fees.

agrinnall

If you can afford to own and run a car then you can afford to pay the VED by a method that doesn't attract a charge, or you can afford the £2.50 fee for CC payment if you insist on paying that way.

bengalknights

Is this more something to request of Pistonheads users, being motor related.

chattychappy

agrinnall wrote: »

If you can afford to own and run a car then you can afford to pay the VED by a method that doesn't attract a charge, or you can afford the £2.50 fee for CC payment if you insist on paying that way.

But that's hardly the point, is it?

Regulation has intervened to stop retailers levying a CC fee which is more than the cost to them. The OP is complaining that the government doesn't apply this restriction to itself, despite words to the contrary.

MiserlyMartin

agrinnall wrote: »

If you can afford to own and run a car then you can afford to pay the VED by a method that doesn't attract a charge, or you can afford the £2.50 fee for CC payment if you insist on paying that way.

I knew there would be someone who totally misses the point!

HMRC jacked up the CC fees only to reduce them recently.

Candyapple

How many £2.50 'processing' fees does the DVLA levy in a typical month/year?

The total number of such charges levied during 2009-10 was 3,422,021.

That was £8,555,052.25 in 1 year alone!! :eek:

On that basis, the figure for the last 7 years (it's probably a lot higher given those numbers are 7 years old) would be...............................£59,885,367. :eek::eek:

If you want to bring Martin Lewis's attention to this / ask him to campaign about it, he seems to be on Twitter a lot - maybe tweet him a link to this thread?

https://twitter.com/MartinSLewis

eskbanker

MiserlyMartin wrote: »

DVLA's charge of £2.50 for paying your VED by credit is a rip off its against the recent EU directive and the governments own advice to companies. This charge can work out as much as 25 per cent car tax bill of the lowest rate bands.

You might remember a 'super complaint' to the OFT by consumer group Which? that resulted in the Treasury announcing a ban on these fees by the end of 2012.

I don't remember any such announcement of a ban as such, do you have a source for this? On the contrary, the Consumer Rights (Payment Surcharges) Regulations 2012 clearly allow surcharges but mandate that they're capped at the cost to the trader.

MiserlyMartin wrote: »

This came into force then last year some companies cut their credit-card fees after a European directive capped part of the wholesale cost of transactions at 0.3 per cent, reducing by about 0.5 percentage points the cost of processing payments. In Jan this year the government warned companies and public bodies that their charges should not be more than the cost of processing transactions.

The capping of wholesale intercharge rates is a completely separate issue from the prohibition of merchants profiting from specific payment types, which are covered under the above regulations. There is no need for a government 'warning' - these regulations are clearly defined and in force.

The intercharge rate cap doesn't necessarily reduce costs to merchants (including DVLA), and many will be on long-term contracts with their card acquirers anyway, so reductions may follow later if/when cost savings are passed on by the acquiring banks.

MiserlyMartin wrote: »

Yet the government has failed to ensure its own departments follow this. I've found this freedom of information request which shows how they justify the charge but this was in 2010 before credit card processing fees have tumbled. Therefore by keeping the £2.50 charge, DVLA is involved in unfair profiteering from those who want to pay by credit card, especially those struggling with money doing a 6 month renewal.

Are there any plans for MSE or Martin Lewis to highlight this charge and do some campaigning on behalf on the public? Its not just DVLA, there are still some companies, including airlines, cinema operators and insurance companies charging fees of over 2% for payment by card!

There's no point in bringing out successive bans and regulations on this if it is never enforced!

Just because you believe that DVLA (or any other merchant) is profiting from card payments, that doesn't make it true of course, but if you can make a case that on average they're paying less than £2.50 to process a credit card payment then this should be addressed via the procedure outlined in the government's guidance on the regulations:

Q. I believe I may have been charged an excessive payment surcharge. What do I do?

You are entitled to a refund of the excessive charge. In the first instance you may take it up with the trader concerned. If you continue to be dissatisfied you may take legal action to obtain the refund, or you may complain to your local authority’s trading standards officers or, if appropriate, the Department for Enterprise, Trade and Investment in Northern Ireland.

If you have got a dispute and the business’ complaints procedure hasn’t resolved it, you may be able to try alternative dispute resolution (ADR e.g. through a relevant trade association, sectoral ombudsman or complaints handling scheme) where an independent person looks at your problem and tries to help you and the trader reach an agreement. Further information can be obtained through the Citizen’s Advice Bureau Website at:

long link

I do take your point that it may be time to test this via FOI though, but even if the charges have reduced from the £1.87 to £4.65 range quoted in 2010, they could still easily average £2.50....

agrinnall

MiserlyMartin wrote: »

I knew there would be someone who totally misses the point!

I'm not missing the point, I just think your point is flawed (as explained much more eloquently by eskbanker than I ever could).

MiserlyMartin

eskbanker wrote: »

I don't remember any such announcement of a ban as such, do you have a source for this? On the contrary, the Consumer Rights (Payment Surcharges) Regulations 2012 clearly allow surcharges but mandate that they're capped at the cost to the trader.

At the late hour I posted the original topic I could not find any legislation that would back up what I had remembered being announced at the time. I wanted to see it so I could see if how it was supposed to be enforced (which it doesn't appear to be) Heres's a source of many.
Airlines, travel companies and retailers are to be banned from charging fees when people pay by credit or debit cards, ministers will announce today.

The Consumer Rights (Payment Surcharges) Regulations 2012 you mention could well have been that legislation. Having a quick scan through it looks to have been updated to include the EU changes in 2015. You say there is no need for a government warning yet that is exactly what they did. It seems to me that we are 5 years later down the line with no progress made for consumers on CC charges apart from the costs to businesses from the CC companies falling which they are pocketing if they have not cut the charges to consumers.

MiserlyMartin

agrinnall wrote: »

I'm not missing the point, I just think your point is flawed (as explained much more eloquently by eskbanker than I ever could).

I don't know why there seems to be one or two who have to disagree for the sake of disagreeing, but that always seems to be the case on MSE forums even when the points being made benefit everyone including them.
Here's a link for you
https://www.fairerfinance.com/campaigns/red-card-for-card-charges
Main bit here:
"Five years ago, Fairer Finance's founder James Daley ran a campaign at Which? to put an end to unfair card charges. The campaign was a success, and resulted in a new piece of regulation which said companies can only pass on the cost of processing card transactions. They can't charge as much as they like. That put a stop to most companies charging people who pay by debit card - as these transactions only cost a few pence. But many companies continue to charge high fees for paying by credit card. While the costs of accepting credit cards are higher - they're not nearly as high as the 2% that many airlines have been charging.

And at the end of last year, a European ruling capped something called "interchange fees", which make up the largest part of the costs of paying by credit card. The new cap is 0.3% for credit cards. And while there are a few extra costs above the interchange fee, our experts calculate that these are no more than 0.3% for large companies. So there can be no justification for charging 2% or more."