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12 Sep 2018

BY Jennifer Morris

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Abta members demand 'level playing field' for card payments market

Abta is liaising with the Federation of Small Businesses and the Association of Convenience Stores to highlight the shortcomings of the card payments marketplace to regulators.

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Abta members demand 'level playing field' for card payments market

The Payment Systems Regulator (PSR) will review changes to the card payments landscape next spring after concerns were voiced by the retail sector when card surcharging was outlawed in January under the revised Payment Services Directive (PSD2).


Abta members that responded to its call for evidence on the issue earlier this year highlighted a lack of transparency in the various fees they pay for taking card payments. Some said they were not experiencing the savings the changes promised.


Last month though, the Scottish Passenger Agents’ Association said the review “came too late” with agents already struggling financially following the changes.


Luke Petherbridge, Abta’s senior public affairs manager, told TTG: “While the Interchange Fee Regulation obliges acquirers to outline this element – the fee paid between card providers and the banks – there is no equivalent regulation covering the other two charges in the merchant services chain: the acquirer fee and scheme fees.


“As a result, businesses have minimal understanding of the breakdown of these charges or, crucially, the impact of price increases in these respective areas.”


This week, Abta submitted its response to a consultation on the scope and contents of the market review.


“Our main messages are that the current marketplace does not serve the best interest of businesses, and the payments chain needs better oversight and targeted regulatory intervention to increase competition and enhance transparency,” said Petherbridge.


He continued: “The existing lack of transparency makes it near on impossible for companies to question cost increases in any meaningful way, and makes direct comparison between providers more difficult.


“The main losers in this situation are small and medium-sized enterprises because they have less clout and are less able to negotiate preferable terms.


“Of course, the situation for travel agents, whereby they are unable to pass on increased costs, only makes matters worse.”


Abta said it was liaising with other organisations making similar points about the need for the payments marketplace “to work effectively for businesses as well as customers”.

'Main losers are SMEs - like independent travel agencies'

'Main losers are SMEs - like independent travel agencies'

Luke Petherbridge, Abta's senior public affairs manager, told TTG:

 

“It’s more than eight months since new regulations came into force which banned businesses from passing on the cost of processing credit cards to their customers. A measure which will have been felt more in travel than any other industry – given price of holidays and, for agents, the fact that they are unable to factor these costs into the overall price of the holiday.

 

"To date regulation in the payments area, including the credit card charge ban, has focused predominantly on improving outcomes for consumers. While Abta outlined to government and regulators why this legislation wasn’t likely to bring the benefits to consumers as intended as - people no longer know how much they are paying to make card payments, and the cost is spread across everybody, even those not paying by card - the fact remained that as it was the result of an EU directive, it had to be implemented.

 

"Abta has been lobbying the government and regulators to look at the impact these changes, and the wider card payment market, are having on businesses – calling for a review into the market.

 

"Abta members who responded to our call for evidence on this issue earlier this year, highlighted their particular frustration with the lack of transparency in the various fees they pay for taking card payments. While the Interchange Fee Regulation (IFR) obliges acquirers to outline this element – which is the fee paid between card provider and the banks - there is no equivalent regulation covering the other two charges in the merchant services chain, the acquirer fee and scheme fees. As a result, businesses have minimal understanding of the breakdown of these charges or, crucially, the impact of price increases in these respective areas.

 

"The Payment Services Regulator has responded to Abta’s concerns and request for a review, and this week we submitted our response to a consultation on the scope and contents of the Market Review into the cards payment marketplace – due from the Payment Systems Regulator (PSR) next spring. This review is an opportunity to call for better regulatory oversight of the payments marketplace.

 

"Our main messages in our response to the PSR are that the current marketplace does not serve the best interest of businesses, especially SMEs, and the payments chain needs better oversight, and targeted regulatory intervention, to increase competition and enhance transparency. The existing lack of transparency makes it near on impossible for companies to question cost increases in any meaningful way, and makes direct comparison between providers more difficult.

 

"The main losers of this situation are SMEs, as they have less clout and are less able to negotiate preferable terms. Of course, the situation for travel agents, whereby they are unable to pass on increased costs, only makes matters worse.

 

"Abta is not alone in making these arguments. We are liaising with the Federation of Small Businesses (FSB) and Association of Convenience Stores (ACS), who are making similar points about the need for the payments marketplace to work effectively for businesses as well as customers. ABTA looks forward to working with like-minded organisations, within travel and in the wider economy, to call for change when the Market Review is launched next spring.”

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