Agents need to start thinking now about how they cope with the loss of income when they are no longer allowed to charge customers for using a credit card. That was the message of the four leading industry figures invited to take part in TTG’s first Facebook Live discussion last week.
The implementation of the EU’s Payment Service Directive (PSD2) takes effect in the UK from January 13, 2018. It will make all credit and debit card surcharges for customers illegal, and will also apply to other payments such as Apple Pay and PayPal. Corporate cards will not be included under the new law, however.
Moderator for the Facebook Live debate, TTG editor Sophie Griffiths, quizzed the panelists on what agents could do to prepare for the changes, which could cost businesses up to £12,000 per year based on annual revenue of £1 million.
And the panel agreed that agents cannot afford to wait until January to take action. They advised that agents should consider whether to introduce a booking fee to replace the card surcharge (across all forms of payment) and whether this should be a flat fee or based on a percentage of the holiday price.
Another option could be to introduce a new package of additional services for clients, such as The Travel Network Group’s new Concierge Service, which is being trialled at Worldchoice agencies.
The panel also agreed that agents should start talking to customers about any planned changes immediately, as well as considering whether to stop taking credit card payments completely.
Farina Azam, partner, Travlaw
Luke Petherbridge, senior public affairs manager, Abta
Julia Lo Bue-Said, managing director, The Advantage Travel Partnership
Gary Lewis, chief executive, The Travel Network Group
A key message from Julia Lo Bue-Said, managing director of the Advantage Travel Partnership, was for agents to shop around for a better deal with their payment provider. “Talk to your merchant acquirers,” she said. “Do not think you’re getting the best deal just because you have been with someone for a long time. There are deals out there – it’s something people should be doing right now.”
Luke Petherbridge, Abta’s senior public affairs manager, agreed: “An important part of bringing down the cost of card payments is to create that competitive marketplace in the merchant acquirer field.”
Abta has been campaigning against “excessively high” card charges for years, and continues to lobby government on the issue. The association believes the EU’s cap on interchange fees, introduced in December 2015, has failed to reduce these costs to travel companies.
Meanwhile, even though the surcharge ban is an EU initiative, lawyer Farina Azam, a partner at Travlaw, highlighted that the legislation would remain in place after the UK leaves the union in 2019.
“Because it’s a directive, it’s going to be implemented into English law, so when we leave the EU there will be no impact,” she explained.
Azam warned that agents should be transparent about any changes, particularly if they are thinking of introducing a booking fee, and she stressed that financial incentives to use certain payment methods would be illegal. “Booking fees are one option but you have to careful because it has to apply, regardless of payment method,” she added. “As it’s a compulsory fee, you also have to make it clear when you advertise.”
Azam also suggested that any booking fee should be based on a percentage of the holiday price rather than as a flat fee on each booking.
“The tricky part is that customers will have to do the maths when they are looking at the price,” she added.
Gary Lewis, chief executive of The Travel Network Group, warned that having conversations with clients about a new booking fee could draw “negative” reactions. He instead suggested introducing a package of extra services that could be sold to clients to make up for the lost income from card charges.
“You have to look at how the member adds value to cover the £20 to £25 credit card charge,” he added. “That’s why we have launched our Concierge Service. For an extra £10 per passenger we will print out boarding passes, do your visa application and offer a 24-hour helpline.”
Lewis went on to suggest all agents could unanimously stop taking credit card payments for a day. “If we said we would not take credit cards en masse for one day only, then that would start a conversation,” he added. “That’s a PR opportunity.”