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), more than half of respondents (58%) 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, says a review is needed following the clear failure of the EUs Interchange Fee 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.
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, ABTA has highlighted how claims the legislation is banning “rip off fees” helped to create the misplaced perception that businesses have been profiting from card payment fees, which 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 ten times higher.
Mark Tanzer ABTA Chief Executive said: “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. What has actually happened is that businesses are no longer able to pass on card payment card costs to their customers that choose to pay by card – but the costs to businesses still stand, and in some cases have gone up. 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.”
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 simply to go some way towards covering the costs of high card charges or refuse cards altogether.