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"Excessive" fees for using a debit or credit card to be banned by the end of 2012

Card surcharges have spread like wildfire. You get them when you go to the cinema, often when you book a train ticket and, most complained about, are airlines. Their surcharges alone add up to 300 million a year.

Under government plans, "excessive" fees for using a debit or credit card will be banned by the end of 2012.

However, firms will be allowed to levy a "small charge" to cover payment processing costs.

Companies are being more open on their websites about the charges, but the Government ban would restrict them to charging no more than the actual cost of processing a payment.

Mark Hoban MP, Treasury Minister commented: "I think it's reasonable to enable service providers including airlines and others to make some charge for the cost of using credit cards, but I think it's got to be a reasonable and fair charge to the consumer."

So what is reasonable and fair? The cost to the customer of paying by credit card with easyJet is 12.95; it's 3.50 for rail tickets from; to get your tax disc for the car with a credit card is 2.50. But the processing cost of paying by debit card is just 20 pence and by credit card up to 2%.

And what if companies deny that it's a card surcharge? Ryanair says that its much-criticized charge of 6.00 per flight is just an admin charge which shows how tricky this could become for the Government having to define what really is a card surcharge and then how big a charge can be justified.

Even if that leads to card charges being cut, companies might simply raise other prices to get the money back.

Richard Lloyd, from Which? says: "The competitive pressure that will be applied because consumers will know what the real price is should keep that in check, but there is a risk that some prices will go up as a result of this."

A Europe-wide crackdown on ticket and other surcharges was planned anyway for a few years time. What the Government is doing is bringing forward the UK ban on excessive charges to the end of 2012.