If it was a 'switch' or visa debit card then the shops usually have a floor limit, say �50. Anything under this is automaticaly authorised. That is how a 'switch' or visa debit card differs from a 'solo' or visa delta card, with solo or visa delta, every transaction needs authorisation, no matter how small. That is probably why the transaction wasn't declined.
As to whether it is extortionate, then yes, I think it is. Saying that, my bank (NatWest) have charged me this on many occasions for going less than a fiver over my limit!!