An EU clampdown on debit and credit card surcharges from January 2018 could cost the UK travel sector up to £150 million, a tax specialist has warned.

The ban on surcharging for credit and debit card payments for most transactions, including flight and holiday bookings, will apply from January 13 when the second EU Payment Services Directive (PSD2) takes effect.

UK businesses are already barred from surcharging on cards to improve profit margins, but the costs of card processing can be passed on under current rules.

But the EU directive bans any charge on Visa and Mastercard payments.

The UK government went further this week by also banning retailers from charging for American Express and Paypal transactions from January.

UK travel association Abta criticised the blanket ban, warning: “Preventing travel companies and other retailers from passing on the often excessively high charges they face when taking card payments, risks increasing prices for everyone, regardless of how they pay.”

Abta said it would be writing to the government to “highlight the concerns of travel agents and provide examples of how these new rules will negatively impact the travel industry and their customers”.

It called on the government to “address the real issue – the high level of fees charged to companies when taking card payments”.

The UK Cards Association’s card expenditure statistics for the year to April show consumer credit card spend with travel agents totalled £7.5 billion.

Based on current charges of between 0.5% and 2% per transaction, this suggests the ban could cost the sector between £35 million and £150 million.

Travel businesses face the choice of absorbing the additional costs or passing them on to all consumers either in the form of increased prices however they pay or booking fees.

Ian Bell, head of travel and tourism at UK accountancy firm RSM, said: “This may seem like a fairly minor change, but travel agents who currently pass on card costs to consumers may feel a significant hit.

“Many will no doubt consider raising headline prices, but nobody wants to be the first to jump.

“Firms need to consider their options now to ensure they don’t suffer a financial headache in the new year.”

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