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Abta promises guidance on how to incentivise non-credit card payments

Abta plans to issue guidance to agents about what incentives they can offer customers to pay by means other than credit or debit card after January 13 when a ban on card charges comes in.

Simon Bunce, the association’s head of legal affairs told the Hays Independence Group conference in Marbella, Spain, that this was the most pressing regulatory change facing the industry.

He said the outlawing of payment card charges hits agents particularly hard because of the high transaction value of what they sell and because they do not control the price and cannot absorb bank fees like operators can.

Bunce said the intention of the new rules that it would lead to a reduction in bank transaction costs has not happened.

“Everyone in the industry is getting hit particularly hard by this. There were all the best intentions from the [European] Commission but it has not worked,” he said.

Bunce said there were potentially a number ways agents could avoid having to take a hit on transaction fees their merchant acquirers levy.

One option is to simply stop taking card payments “if your business model allows”, another is to add a booking fee.

The new rules apply to all sales to customs in the EU and both the card issuer and merchant acquirer have to be based in the EU.

Firms with merchant acquirers outside of the EU can still charge fees but Bunce said that would be “pretty hard to maintain” in a market where no one else is charging.

The most promising way to avoid having to absorb banking fees is to offer customers non-cash incentives to pay in different ways than with payment cards like cash or bank transfer.

This could be access to an airport lounge or by offering vouchers for money off future holiday sales.

Bunce said: “We are in discussions with the Treasury to get this clarified. Although you can’t charge someone to prevent them from using a card there are there ways you might incentivise them to pay in different ways.

“The Treasury seems to be comfortable with that. We will be coming out with further advice on this.”

Another option for agents is to apply a booking fee discriminately on certain products as long as the fees is not tied to the way that the customer is paying, but that information must be made clear upfront.

For instance some operators are offering extra commission to try to mitigate the impact on agents of absorbing the bank fees.

Bunce said: “We are talking to the treasury on two things. One, let’s look at the parameters of these incentives.

“You cannot charge people who want to pay by card but it might be cheaper for you to take payments in a different way, how can you incentivise them?

“We want to be able to come out with clear guidance before members trip over in to doing something that’s too close to what will be a banned practice.

“The other thing we are talking about are costs in that payment chain. The intention was to bring the interchange [bank] fees down. That’s not worked.

“We have had quite a good response from the Treasury. They are very keen to see what impact there is on business of those [payment] fees and interchange fees.

“Also, we are stressing the impact on smaller businesses. This is something that’s having a disproportionate effect on smaller businesses.

“We are getting a good response, hopefully we will see something coming through. If you can bring down the costs in that process then that brings down the burden on you as retailers selling to the consumer.”

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