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17 Jan 2018

BY Tom Parry

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Agents switch away from Amex as PSD2 card surcharging ban kicks in

Agents have begun ditching American Express as the financial brunt of processing payments becomes “too high to absorb”, consortia have warned.

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“When it’s a credit card payment charge of 2% but you’re getting say 0.5% extra commission from a supplier, then it’s manageable. With Amex you’re looking at a 2% or 3% and that’s just too high for many agents.”

Both The Travel Network Group and the Advantage Travel Partnership told TTG some members had made the decision not to accept Amex to ease the pressures on margins as a result of the newly imposed ban on card surcharging – the Payment Services Directive 2 (PSD2) – which came into force on Saturday (January 13).


Lisa Henning, The Travel Network Group’s membership services director, said she believed the switch away from Amex – whose processing fees are typically higher than traditional credit card rates – was “widespread” among its members.


“When it’s a credit card payment charge of 2% but you’re getting say 0.5% extra commission from a supplier, then it’s manageable,” she said. “With Amex you’re looking at a 2% or 3% difference and that’s just too high for many agents.”


David Moon, head of business development at Advantage, said the same move had also been made by some of its members, who he described as “facing a real challenge”, detailing how some members’ customers had waited until the implementation of the ban to book, to avoid surcharges.


Henning said some The Travel Network Group agents were also placing a value-based cap for customers wishing to pay by card, while Moon described how a number of Advantage members were taking full booking balances via bank transfer.


The warning over Amex came after Abta released a testimonial of one agent who believed their costs could rise by “as much as £20K” under PSD2.


Alan Wardle, Abta head of public affairs, said the association was asking the government to launch “an urgent review” into the card payments market.


Echoing the call for lower charges, an independent agency owner, who did not wish to be identified, told TTG this week that he had imposed a “blanket ban” on all forms of card payment due to merchant services fees being too high. “I’d urge all agents to do the same… until [the providers] lower their rates I won’t accept card payments. They can’t be allowed to get away with it,” he said.


Aito chairman Derek Moore took aim at the government, describing its handling of PSD2 as “a dog’s dinner”, citing its failure to enforce capped charges for card transactions at 0.3%, and allowing increased administrative fees.

 

“The villain is actually the banking sector, which should be called to account by government and required to lower its fees and to curb its super profits,” he argued.


An American Express spokesperson said: “American Express welcomes the government’s ban on surcharging. This decision will create a level playing field for consumers and will give them the confidence to use the payment method of their choice.”

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