There has been a lot of talk in the press recently about how agents are profiting from debit and credit card surcharges, according to new research from the consumer body Which? They have gone as far as to ‘name and shame’ agents that they claim are taking advantage of their tenants with exorbitant surcharges.
The new Which? research claims that four of the top 20 UK estate agents by branch network size (Andrews, Foxtons, Knight Frank and Badger Holdings), charge for debit card transactions, and 13 charge for credit cards when renters pay their deposit.
Which? go on to say that the highest charge for credit cards was 5% from Andrews; well in excess of the estimated 1% to 2% cost of processing a credit card payment.
Analysing the research figures from Which?
With the most recent figures putting the average monthly national rental at £713, Which? assert that credit card charges add £53 to a typical six-week rental deposit. For London properties this figure amounts to an additional £77.
For debit cards the highest charge was 0.5% from Foxtons and Knight Frank, although recent Which? research showed the actual cost of a debit card transaction is closer to 10p.
Government legislation…sooner or later?
The figures follow a super-complaint from Which? to the Office of Fair Trading (OFT) in March this year, asking the regulator to investigate excessive credit and debit card surcharges. The OFT responded on June 28 proposing that debit card surcharges should be banned.
Which? say this could be achieved by a simple amendment from the Treasury to the Payment Services Regulations. However, as yet the Government has taken no action and consumers will have to wait until 2013 for the Consumer Rights Directive – which will limit charges – to be implemented.
These claims from Which? follow hot on the heels of Citizens Advice allegations that letting agents are ripping off landlords and clients with extra charges.
Customer trust comes with transparency:
In light of this data, we are keen to point out two aspects of this that potentially impact our own business. Firstly, most agents are not seeking to profit from these transactions. Secondly, we know just how important transparency is to our customers.
In the interests of customer friendliness, we thought it fitting to outline our charges. We pay between over 1.5% and up to 3.8% to process credit card transactions (less for debit cards, but it does cost us money!), and charge 4%+Vat as a transaction fee on deposit/rent monies.
We understand that our customers are being squeezed from so many directions with household bills and inflation rising. With that in mind, we set these charges at a level which is fair. After all, we have to transfer the amount in full to the landlord without deducting our costs for processing. We don’t charge tenants for using debit cards, even though that still costs us a little bit, and we don’t charge tenants a surcharge on our fees as that money goes straight to us.
We also charge tenants an administration fee for paying mid-term rent by card. Tenants can pay by standing order to aviod this, and most lease agreements will specifically require them to do so – if they pay by an alternative method that is up to them, but they should expect to be charged. If all 1200 of our tenants paid by card every month, we’d need three more staff members just to deal with that and then administration charges for landlords and tenants would go up across the board – all letting agents are trying to do is make charges fair, charging those that want to take advantage of a credit card facility and not charging those that choose not to use it.
Which? need to take another look:
Which? suggestion that agents who attach a surcharge on deposit or rent monies being paid, which then have to be passed over in full to a landlord, are somehow profiteering is at best under-researched. Perhaps those at Which? would like to try paying a landlord rent monies that are a few percent lower than expected to cover a tenant’s card processing costs – they would soon find out what landlords think of their research results!
