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12 Oct 2017

BY Rob Gill

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Advantage plan combats loss from surcharge ban

The Advantage Travel Partnership has produced a Profit Protection Plan to help leisure travel agents deal with loss of income from the ban on credit card surcharges for customers.

Profit Protection Plan
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"We cannot emphasise enough the significance of PSD2 and how taking action now can help lessen the impact"

As part of the EU Payment Services Directive 2 (PSD2), which apply from January 13, 2018, travel firms will not be able to charge fees to clients for using credit cards and other payment methods, including Apple Pay and Paypal.


There are fears this will hit agents as they will no longer be able to pass on the cost of taking card bookings.


Paula Lacey, Advantage group commercial director, said: “We cannot emphasise enough the significance of PSD2 and how taking action now can help lessen the impact it will have on business.


“By publishing the guidance we are offering some practical advice to help members understand the impact and mitigate the additional costs resulting from the legislation.”


Lacey said agents would also be affected by a “likely increase” in the number of customers paying by credit card due to enhanced loyalty and reward points on offer.


Advantage’s guide to coping with the new rules is divided into sections: operational changes, increasing income and money-saving opportunities.


It has also created a PSD2 card payment calculator to help members find out how they will be affected by the changes and “pinpoint” which areas to focus on within their business to make up for the shortfall.


“We cannot stress enough the importance of fully understanding your annual merchant fee costs and what percentage of your profit will be eroded by the PSD2 directive,” added Lacey. “This will clearly demonstrate the amount you need to recoup back into your business.”


The changes do not apply to business travel agents as long as the client is using a corporate card.

 

Infobox

Operational changes:

  • Shop around to secure the best merchant fees
  • Be prepared to negotiate and take a hard stance
  • Know your split between debit and credit card payments
  • Consider charging a booking fee across all payment methods
  • Incentivise alternative payment methods, if commercially viable

Increasing income:

  • Introduce/review your sales policy
  • Track all conversions regularly
  • Make every enquiry count – one extra booking a week could mean an extra £8,000 a year in commission

Saving money:

  • Review your business costs annually
  • Email your correspondence when you can – don’t print it
  • Always print in black and white, rather than colour
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