An EU ban on card transaction charges will hit the industry hard leaving firms with no option but to increase prices for all, says Gemma Antrobus chairman of Aito Specialist Travel Agents
As the saying goes, there’s always the calm before the storm. And a storm, perhaps a cyclone or a hurricane, is about to hit us hard.
The travel industry is resilient. Many of us have survived a couple of recessions, more airline strikes than we care to remember, crises in the Middle East and other geopolitical situations.
Yet despite these challenges, we aim to create exceptional holidays for our clients.
Travel agents have become illusionists of sorts, ever-evolving and moving with the times to ensure we stay relevant.
As one destination goes out of favour or is deemed unsafe to visit, we retrain our teams, rejig our marketing campaigns and find somewhere else.
This is nothing new, but I’m not sure any of us can retrain for or rejig what’s about to hit us.
Someone, who clearly doesn’t run their own small business, as many of us do, has decided consumers who choose to pay by credit card for any goods or services should now be allowed to do so at no cost to themselves.
What a bright idea. Did someone sit down one day and think: “How can we encourage the public to spend more, get into debt and be more beholden to our country? I know, let’s encourage them to use their credit cards more.”
What about the cost of using the cards? The government doesn’t want to cover that, so let’s make the parties accepting credit card payments foot the bill for the privilege of their clients doing so.
In some industries, where profit margins are large, this is already done, but low-margin travel, along with a number of other industries, is about to be hugely affected.
Holiday costs will rise
When the Payment Services Directive II (PSD2) comes into force on January 13, 2018, life for travel companies will change forever and, as far as I can tell, the main loser will be the consumer.
I’m not a credit expert, but the only way I can see the industry getting around it is to increase holiday prices.
Tour operators will need to up their prices to cover the credit card costs from direct clients and increase commission payments to their agent partners.
Agents will need to use this increased commission to cover the credit card charges for their clients.
So the person penalised is the one who doesn’t want to pay ‘on the slate’.
Those who can pay in cash, by cheque or bank transfer will have no choice but to pay the higher price.
Apparently it will be impossible to offer them a discount for paying up front. What a mess.
On the bright side, we’re all in this together because it’s something that will affect us all.
My suggestion to all agents, Aito or otherwise, is to look at how exposed you are currently in terms of credit card charges, because once clients realise they don’t have to pay the charge, I can’t see them using their cards less.
They’ll use them even more, especially if they claim air miles or loyalty points.
More precise details will follow in the coming months, but forewarned is forearmed.
This is a community-moderated forum.
All post are the individual views of the respective commenter and are not the expressed views of Travel Weekly.
By posting your comments you agree to accept our Terms & Conditions.