A proposal for operators to raise commission rates by 0.5% to offset agents’ costs from the ban on credit card charges has divided opinion among agents.
Aito has recommended its operators increase commission from January when the EU’s Payment Services Directive 2 comes into force.
The law will prohibit businesses from passing on card fees, meaning agents could be left out of pocket.
Council member Sam Clark of Experience Travel Group and Gemma Antrobus, of Haslemere Travel, who also chairs the Aito Agents panel, have proposed the 0.5% solution. They reached the figure after assessing average package tour prices and commission levels.
They claim the increase would have an approximate levelling effect between bookings made by card and other payment methods.
One agent, however, told Travel Weekly an increase in commission rates would lead to discounting.
Phil Nuttall, managing director of The Cruise Village, said: “Why would an operator want to pay more commission only for [agents] to discount?
“I don’t think operators should be funding the shortfall. Operators will be dealing with payment charges on their direct sales. Agents are going to have to make a decision.”
He said his business introduced a booking fee two months ago ahead of the impending ban on card fees.
Niall Douglas, owner of Full Circle Travel in Oxfordshire, said: “I can’t see [commission hikes by operators] happening on a grand scale. They might increase their own prices to cover their own sales, but I think most will think it’s for us, the agent, to sort out.”
Travel Weekly understands The Freedom Travel Group and The Advantage Travel Partnership have both set up focus groups to look at the impact of the card fee ban.
Douglas said he was confident that Freedom, of which Full Circle is a member, would negotiate favourable rates with suppliers that took into account the fees ban.
Advantage commercial director John Sullivan would not comment on Aito’s plans but said his consortium was looking at “a raft of initiatives” on behalf of members around the issue of card fees.
Miles Morgan, owner of Miles Morgan Travel, praised Aito’s idea and said it would make a “sizeable difference” to his business.
“I applaud it,” he said. “This week I have been doing my budget and of course you get to the credit card line and it’s pretty horrible, so when I got a letter about Aito’s plans it makes a big difference.”
He said his agency was looking at losses in the tens of thousands when the card fee ban comes in.
The looming ban on charges for customers paying on credit and debit cards has also led to calls for suppliers to consider paying commission on non‑commissionable items, such as ski rental, lift passes and port taxes on cruises.
Angus Kinloch, managing director of online ski agency Skiline, said his business stood to lose up to £80,000 a year by absorbing card charges on non‑commissionable elements.
“Credit card charges are neither here nor there for operators as they can put prices up, but we work on commission,” he said.
“From January, I face picking up the bank charges for collecting £300,000-plus of profitable sales, for which the agency is paid nothing.”
Miles Morgan of Miles Morgan Travel said: “There is no logical reason why port taxes should not be commissionable.”
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Aito recommends 0.5% commission hike to offset outlawing of payment fees