Opinion: It's not credit card charges that are excessive it's the criticism

Opinion: It's not credit card charges that are excessive it's the criticism

By Chris Photi, head of travel and leisure, White Hart Associates

Last week BBC Radio 4’s Money Box programme rapped the travel industry over “excessive” credit and debit card charges. 

The Department for Business Innovation and Skills (BIS) issued guidance on the Consumer Protection (Payment Surcharges) Regulations 2012 in March 2013. 

This guidance quite clearly refers to the prohibition of excessive payment surcharges, but also states in the guidance that the costs borne by the trader can be passed on to the consumer. 

The size and nature of these costs will vary with the type of business concerned, but broadly they allow travel companies to charge onto the consumer direct costs.

These costs include the merchant service charge (some merchant acquirers themselves charge an industry risk surcharge), IT and equipment costs, risk management cost (including fraud detection and prevention), processing fees for charges in relation to the reversing or refunding of payments.

They can also include any operational costs that can be separately identified as internal administrative costs arising from activities dedicated exclusively to card payments. 

I have carried out a direct costing exercise for a number of travel businesses, which have broadly reflected that historic charges being made by travel companies for the use of a credit and debit card charge have not been “excessive”. 

Mainstream news organisations approached a number of these travel companies and when they have responded with a robust confirmation that their charges were entirely justifiable and had been calculated in accordance with the BIS guidance, have received no news coverage whatsoever. 

Only companies where their response was uncertain have the news media reported the potentially “excessive” nature of these charges. 

Sadly it is big news to report that consumers are being “ripped off”, but not big news if travel companies, in line with the BIS guidance, are merely passing on the direct costs borne by them in relation to facilitating the use of a credit or debit card.

Consumers generally pay by credit card or certain kinds of debit card in order to avail themselves of consumer protection under either the Consumer Credit Act or the Visa/Mastercard rules. 

Those consumers who therefore pay a trader for the use of a credit or debit card charge are both bearing the cost of the facility and enjoying the added benefit of unequivocal consumer protection at rates likely less than the £2.50 per person Atol Protection Charge. 

Balance needs to be applied in relation to this debate, which is all too often forgotten in the pursuit of a “sensational story” and similarly misunderstood by the industry itself and the so called experts who sometimes comment on such issues.


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