According to multiple sources and senior industry finance chiefs, travel firms will face bigger credit card charges, as they aren’t able to pass on the costs to consumers.
Barclays Corporate Banking director Chris Lee described this as a “no-brainer’, referring to the fact that consumers will have to pay by credit card, when companies will no longer charge for transaction, starting with January 2018, says Travel Weekly.
This can affect travel budgets in a positive way
“Holidays are a big‑ticket item. It’s a no-brainer to get a month’s free credit [when buying],” Lee said. Also, during a travel conference in London he added that “this is coming up in every travel client meeting we have.” We’re curious if this will affect somehow those using rewards credit cards for getting travel-related goodies…
As for official numbers, UK Card Association data for the 12 months to September 2017 reveals that payments made by credit card across travel were split 44:56 credit to debit. However, it’s worth mentioning that there was also a 36:64 split in transactions through agents.
Usually, credit card payments cost more because of the liability risk to the card provider, even though the costs of debit card transaction have increased recently.
“If card risk increases, it’s going to eat into the overall debt appetite in the sector and we may hear talk of extra card insurance cover,” Charlie Lee warned.
Keeping it short, that would significantly increase the overall costs for both agents and tour operators.
The Directive will start being applied in 2018
In order to avoid this, the EU Payment Services Directive – or short, PSD2 – which forbids any charge for debit and credit-card transactions, will start being applied on January 13.
“We’ll see a lot of fragility in the retail travel sector because of the card charges,” said John McEwan, chairman of travel management company CTI and former chairman of Abta.
On the other side, we’re convinced that this measure will be received very well among tourists, since they will basically pay less for any credit card transaction made while traveling.
