Last week, Kuoni announced it would increase commission for independents by 0.5% – effective from January for all transactions – as The Payment Services Directive 2 (PSD2) will prohibit agents from charging fees to customers for the use of debit and credit cards.
This means it will fall to them to cover the costs levied by banks and credit card firms – something Abta has called to be reviewed.
Kuoni’s move follows Aito’s recommendation last month that its operator members pay additional commission when PSD2 is introduced.
Sunvil Holidays and Prestige Holidays have also made the 0.5% commitment. Noel Josephides, chairman of Sunvil, said: “We work closely with agents and feel like we need to share the pain. This extra bit of commission will give them some support as we can up our prices, but they can’t as they are on a fixed commission.”
However, not all agents believe the increase will fully address the issue at hand, arguing that in the long run “consumers will be worse off”.
Simon Morgan, owner of agency chain Tailor Made Travel, told TTG that he thinks the travel industry has “had it too good for too long”.
He said: “I like what Kuoni has done by boosting commission, but the only way to address the problem is to process payments through operators – that’s the way the financial services industry has done it for years.”
Andrew Earle, owner of Andrew Earle’s Holidays, said his business would be “losing [out on] about £80,000 a year” come January – not taking into account some operators upping commission – and that the company was currently looking to develop its direct debit payments offering.
He said: “I commend Kuoni for boosting commission along with some of the Aito members, as that extra 0.5% will make a big difference to some.”
Earle added he would like to see tour operators put direct payment systems in place: “That way operators get the money straight away, and we aren’t losing the fee.”
Meanwhile, Nicholas Harding-McKay, managing director of Travel Designers, told TTG he was considering “banning” credit card transactions in his store by only accepting debit cards and bank transfers.
Confused about what the upcoming changes the Payment Services Directive 2 will mean for your business? Join TTG in a Facebook Live discussion with industry experts, examining what the legal implications of the new directive are and how best to counter the impact of having to absorb credit card fees.
September 15, 10-10.30am