Ryanair card decision opens prepaid skeleton cupboard
The Ryanair decision to stop waiving booking fees for Visa Electron, suggesting instead that people should use a MasterCard prepaid card for booking is going to have mixed results for the card industry.
On the face of it, this is a high profile endorsement of, and publicity for prepaid cards, which certainly need the boost.
But it has well and truly opened up the Pandora’s Box of prepaid charges. The truth of the matter is that prepaid cards are far from free either and cut it any way you like, they are certainly not a low cost alternative.
Take Ryanair’s own recently launched card, which costs a stinging £60 to set up. The card has a range of perks, which when it was rolled out in Ireland earlier this year, included free flights, but it doesn’t come close to comparing with the £5 each way cost for using an Electron card, or a credit card. Especially as credit cards also offers protection under Section 75 of the Consumer Credit Act against default by the airline if you use a credit card and your purchase is worth more than £100.
According to Annie Shaw of consumer personal financial help website CashQuestions.com there are however, prepaid cards that offer a low cost solution. The best are:
• The Demelza Card is free and costs just 50p every time you use. It is free to top up, unless you use a credit card to add the funds, when it costs £2. All profits from the card go to the Demelza Hospice Care for Children charity.
• ICE Travellers Cashcard (sterling version). The card is free and transactions are free, but it costs 2% of the amount loaded to top up.
• Caxton FX Global Traveller Card is free but there is a £1.50 transaction fee in the UK (but Ryanair sales count as taking place outside the UK, as its HQ is in Ireland)
• Phones4U. The card costs £9.99 and you have to load it with a minimum of £10. The card is free to load via BACS or with cash at Phones 4U stores, but you’ll be charged 99p to load up at Post Offices, 3% at Pay Point, 99p on debit cards and 4% on credit cards.
• The Sun Pay-as-you-go Prepaid MasterCard. It costs £6.49 (but you get this back if you top it up with £20). Further top ups are free, but it can cost up to £1.50 each time you use it.
Ryanair currently charges £5 a passenger for each journey on all flights booked using a credit or debit card, meaning two adults booking return flights face charges of £20 even if the flights are paid for on the same card during the same transaction.
The card charges have become a huge revenue stream for the airline, which relies on ancillary fees such as baggage and online check-in fees for much of its profit.
Ryanair spokesman Stephen McNamara said: “We are pleased to announce our new partnership with Mastercard, which will enable consumers to save even more when travelling on Ryanair’s unbeatable low fares.
“Passengers can use their Mastercard prepaid cards to pay for Ryanair flights from December 1, while our Visa Electron promotion comes to an end on December 31.”
But the airline’s decision to ditch free Electron purchases could bring it into conflict with trading and advertising rules. Advertising Standards Authority rules state that where an advert shows a price it should include all non-optional charges.
Office of Fair Trading rules state that if the charges are unavoidable and foreseeable they should be included in the headline offer.