Agents unite to demand urgent review of credit card fees
ABTA has written to the Treasury calling on the government to commission an ‘urgent and thorough’ review of the UK’s card payments market.
This follows the results of a survey of ABTA members, which found that since the introduction of the European Union’s Interchange Fee Regulation (IFR), 58% of respondents have experienced increased costs for taking card payments, and very few have made significant savings.
The ABTA letter, co-signed by the Association of Independent Tour Operators (AITO), the Scottish Passenger Agents’ Association and The Advantage Travel Partnership, said a review is needed following the clear failure of regulation, which was introduced in 2015 to lower card charges.
The IFR capped interchange fees – the fee banks and card providers charge each other – at 0.2% for debit cards and 0.3% for credit cards.
"However, it would appear that other fees relating to card charges have been increased by card providers to make up for the shortfall in revenue," said ABTA.
Since January, companies have been banned from passing on the cost of credit and debit card transactions to their customers following the introduction of the Payment Services Directive.
ABTA has also stressed the need for greater transparency throughout the payments chain, and more ‘thoughtful’ language from the government when explaining the changes.
In particular, it said claims that the new directive was banning ‘rip off fees’ helped to "create the misplaced perception that businesses have been profiting from card payment fees". ABTA insists this is untrue as businesses have only ever been able to recoup their costs.
"There is also a common misconception, fed by media coverage, that the interchange fee of 0.2% or 0.3% is the total cost to companies, however some ABTA members have reported total fees as high as 3% – over 10 times higher," it said.
ABTA chief executive Mark Tanzer added: "When the European Union introduced the Interchange Fee Regulation and the subsequent Payment Services Directive, the intention was to reduce card charges, to the benefit of the public.
"However, far from providing any meaningful consumer benefit, the surcharging ban is likely to increase prices across the board, affecting all consumers, including those wishing to pay by other methods.
"This is not what the EU intended and the Government needs to conduct an urgent review into the charges made by card companies so that they are proportionate and fair and these real savings can then truly be passed on to consumers."
ABTA warned that businesses that do not have the ability to set their prices, such as travel agents – where the operator sets the price and the agent earns commission on the sale – are likely to be forced to consider the introduction of booking fees to go some way towards covering the costs of high card charges, or refuse card payments altogether.
Linsey McNeill
Editor Linsey McNeill has been writing about travel for more than three decades. Bylines include The Times, Telegraph, Observer, Guardian and Which? plus the South China Morning Post. She also shares insider tips on thetraveljournalist.co.uk
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