Abta members report £20,000 cost of credit card fees ban

Abta members report £20,000 cost of credit card fees ban

Abta members claim the ban on credit card fees could see their annual costs rise as much as £20,000.

The association today reiterated its call to the government for a review of the card payment market ahead of the implementation of the Payment Services Directive II (PSD2) coming into force on Saturday, January 13.

Abta says that although the regulation applies to all industries, it is a particular problem for travel firms due to the high value of transactions and that regulation designed to reduce the costs of taking card payments has not been effective – leaving travel companies picking up the bill for these payments.

Abta has been analysing data from its members on the level of their costs and intends on sharing the evidence with the government.

One member, a travel agent specialising in European accommodation, was quoted by Abta as saying: “If all clients now choose to pay on card our costs could rise as much as £20,000. For an SME that is very challenging. We fully support the fair charging principal of PSD but there is a common misconception that fees have gone down. It is the merchant service fee applied by card processors that will really hurt travel companies.”

A tour operator specialising in activity holidays reported: “We have been charged approximately a total of £5307.96 just for our GBP transactions during 2017. We are looking at a total cost of approximately £10,000 for all currencies during 2018 and we certainly will make a loss on that.”

And a European tour operator/travel agent said: “We have had to spend time and money as a result of the directive to implement a new concept which is less attractive than the existing system. This is not an advantage to the industry or the customer.”

Agents speaking to Travel Weekly ahead of the ban on card fees have described varying tactics for dealing with the extra costs.

These include stopping taking credit card payments altogether, encouraging alternative payment methods such as bank transfers and direct debits, working with the more than 20 tour operators who have upped commission to help offset the cost or selling more add-ons to cover the extra outlay.

Alan Wardle Director of Public Affairs said: “We have been talking to the government and regulators about the serious difficulties this will cause the travel industry.

“While there is no way of reversing the ban on charging card fee, we are asking government to launch an urgent review into the card payments market. We know from speaking to our members that card payment costs have not gone down, as was the original intention with the legislation, as although the interchange fee has reduced for credit cards, this is only one element of the overall charge to traders and, in many cases, those other fees have increased.

“We will use the data collated from our members about the real level of fees that are levied by card companies to help us make the case to government that an urgent review of the card payment market is needed.”

The new regulations apply to consumer cards. Businesses will still be able to charge corporate customers a fee for paying by corporate credit or debit card.

Abta members comment on how PSD2 will affect their business:

 Agent specialising in European accommodation: “If all clients now choose to pay on card our costs could rise as much as £20,000. For an SME that is very challenging. We fully support the fair charging principal of PSD but there is a common misconception that fees have gone down. It is the merchant service fee applied by card processors that will really hurt travel companies.”

 Tour operator specialising in activity holidays:  “We have been charged approximately a total of £5,307.96 just for our GBP transactions during 2017. We are looking at a total cost of approximately £10,000 for all currencies during 2018 and we certainly will make a loss on that.”

 A tour operator/travel agent offering trips to Europe: “We will charge a booking fee on all our services regardless of how payment is made to us.  For our packages we will incorporate the booking fee into the total price. We are currently looking into increasing the commission that we give our travel agents to assist them in covering the fees they are charged. We have yet to finalise the details. We have had to spend time and money as a result of the directive to implement a new concept which is less attractive than the existing system.  This is not an advantage to the industry or the customer.”

Comments

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.

More in News