ABTA Calls for Action on Card Payment Costs

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 per cent) 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 per cent for debit cards and 0.3 per cent 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 that the interchange fee of 0.2 per cent or 0.3 per cent is the total cost to companies, however some ABTA Members have reported total fees as high as 3 per cent – 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. 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.”

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.