Holiday credit card sales may rise to 80%

Holiday credit card sales may rise to 80%

The proportion of holidays paid for on credit card is expected to rise to as much as 80% following the ban on surcharges in January, according to Barclays Bank.

The EU Payment Services Directive (PSD2) means travel firms are no longer allowed to charge customers a fee for using their credit cards to cover their transaction costs, which traditionally have been about 2%.

Chris Lee, director and head of travel and professional sports at Barclays Corporate Banking, said prior to PSD2, 70% of holidays were paid for by debit card.

However, since January that proportion has changed to beyond 50:50 in favour of credit cards as consumers take advantage of the benefits of paying on credit.

Speaking ahead of next week’s Barclays Travel Forum, Lee said: “No one knows for sure, but we think that will flip around from what it previously was [and] might go to as much as 80:20.”

He said this trend had left Barclays travel clients with a difficult decision about how to offset the impact of the surcharge ban.

“Many have built it in to their overall pricing for all customers to maintain margins because they can’t discriminate between people who use credit cards and people who pay with debit cards,” he said.

“Some have decided not to adjust their pricing for the time being and have just taken the hit.”

Abta said travel agents are hit particularly hard by the surcharge ban because they do not have the option of raising prices to pass on the costs of processing payments.

The association has demanded greater regulation of the card payment marketplace in a consultation issued by the Treasury and welcomed a separate review by the Payment Services Regulator.

A spokeswoman said: “The current situation is clearly failing to deliver the government’s objective of cheaper card payments, and is putting SME businesses at a severe disadvantage.”

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