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Travel industry news

16 Aug 2017

BY Tom Parry


Agents cut credit card sales to allay financial impact of surcharge ban

Agents have started reducing credit card sales to pre-empt financial pressures from the impending government ban on surcharging, TTG has learned.

Credit card

The ban on surcharging will mean businesses themselves are left to shoulder merchant processing fees.

Jackie Steadman, director of Berkhamsted-based TravelTime World, told TTG her agency had this week implemented a new policy to “not take any more credit card payments” and would now aim to “plateau” the number of its customers using them to book.

Echoing Steadman, Nick Harding-McKay, managing director of Travel Designers in Balham, south London, said his agency would take similar steps on January 13 next year – the date the Payment Services Directive 2 (PSD2) comes into force.

Both agents said they had made the changes to try and counteract the financial impact of the EU regulation, which will see the outlawing of surcharges for payments made on Visa and Mastercard credit and debit cards, American Express and PayPal.

HM Treasury confirmed the law change last month after a public consultation, claiming its actions were to prevent customers falling foul of “rip-off” charges.

The ban on surcharging will mean businesses themselves are left to shoulder merchant processing fees.

Steadman said TravelTime World would accept credit cards for paying deposits but would then secure the rest of the money through a Bacs payment, bank transfer or cheque.

She added that she believed the surcharge ban would put an “overwhelming strain on agents’ bottom lines”, warning that the increased operating costs could impact the service it offers clients.

“We are trying to educate our clients and make sure they know our reasons [for the change],” she said. “We love to add value with transfers, lounge passes… and now we’ll be forced to tell new customers that they may not be able to have those if they pay by card.

“We thought we would bring [the change] in now… we don’t want the floodgates to open in January.”

Harding-McKay said that if his business continued accepting credit cards at its current rate but then had to absorb card processing fees, he would have to grow profits by 20% in the coming year “just to stand still”.

“It would be the equivalent of sacking someone [to cover costs] and that’s ridiculously unfair,” he said. “I think people will actually end up just paying more as prices go up.”

Both Steadman and Harding-McKay acknowledged that they may make exceptions to the policy and would keep it “under review”.

Leighann Morgan, owner of Opulent Travel Services in Shrewsbury, suggested agencies could ask customers to abide by a “preferred payment method”, bypassing credit cards.

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