First up is the implementation of the Payment Services Directive 2, which came into effect on January 13. What this means in plain English – as readers may well already be aware – is that companies can no longer pass on payment card charges to their retail customers (corporate credit cards are not affected).
This was one of the main concerns we heard from Abta members last year, and is a particular problem for agents who do not set the price of the product, so can’t look to offset the costs by raising prices. The worry is high card fees, based on a percentage of the sale, will make significant inroads into profit margins. Abta has been making the point strongly to the government that this could have a detrimental impact on small agent businesses.
Travel companies – alongside all other businesses in the UK – will have their new systems up and running now, to comply with the new law; whether that’s increasing their prices, adding a booking or service fee, or no longer taking card payments. Members should also shop around to ensure they are receiving the most competitive merchant service fees available. We know some Abta members have made significant savings by switching acquirers.
At Abta we surveyed our members about the issue of merchant service fees before Christmas, as we believe the existing regulation has failed to reduce the cost of taking payments, despite this being the stated intention of policymakers. This is because previous legal changes only focused on interchange fees, which are one part of the overall cost of taking payments.
The results of our survey will be published in the coming weeks. However, it is clear that there are also issues around transparency.
The survey demonstrates that businesses are often not given the information around interchange charges that they are entitled to have, for example, a breakdown of interchange fee rates as part of the overall merchant service fee, or a per-transaction interchange statement. Doing this would help understanding of where the costs fall.
Due to the ineffective way the changes have been brought in and the lack of transparency in the fee structure, Abta is seeking an urgent review of the cards payment market, to ensure the government can achieve its aim of lowering the cost.
We believe this is an industry-wide issue and, as such, we will be looking to get all travel bodies behind us to try and get the government to look at it again. While the ban on surcharging is here to stay, getting this review would shine a light on how the costs of taking card payments could be lowered, while also increasing transparency about how those fees are made up. Doing this can only benefit travel businesses and, ultimately, our customers too.
Alan Wardle is director of public affairs at Abta
