Aito boss hits out at ‘dog’s dinner’ of new credit card rules

The Association of Independent Tour Operators has lashed out at government and banks over new credit card rules which have been condemned as a “dog’s dinner”.

The 120-member organisation also hit out at inaccurate consumer media reporting of the changes which were imposed on Saturday.

Aito described “rip off travel industry” accusations in the media as being totally unwarranted and sensationalist.

“The consumer media has been misled both by government and bankers in this connection – and the media, in turn, has misinformed the public,” Aito said.

The new EU payment services directive (PSD2) faced opposition from the travel industry amid fears that it would raise holiday prices across the board.

Aito had argued that the travel industry typically works on very low margins – 1.5% profit before tax is not unusual.

Absorbing the 2% bank charge on credit cards while operating at such tiny margins is thus impossible – forcing up holiday prices.

The travel industry has typically charged 2% for accepting payment by card.

“This is not profiteering – it is simply recharging the cost charged to travel companies by the card companies, ie the banks,” Aito said.

It is erroneous to blame the travel industry for passing on such charges to the consumer, the association added.

”The villain is actually the banking sector, which should be called to account by government and required to lower its fees and to curb its super profits.

“Travel agents work on a fixed commission rate (typically 10%) from their suppliers, yet with PSD2 they have to absorb the 2% bank charge within that commission payment.

“This means a catastrophic 20% reduction in their income, straight from their bottom line. Government has ignored lobbying in this respect despite the problems it will cause such SME businesses.”

Aito encouraged its operator members to increase their commission rates by 0.5% in an attempt to help its affiliated agents cope with the 20% hit on their bottom line.

Aito chairman Derek Moore said: “There is no doubt that this a dog’s dinner of a mess – all totally avoidable had the government listened to the travel industry and concluded that control of the UK’s wayward, profiteering bankers was an essential part of the scenario.

“The solution is for the government to address this unfair state of affairs – of which they are fully aware – quickly, to avoid lasting damage to the SMEs of the travel industry.

“Government needs to freeze bank charges at the 0.3% level originally required by the EU.

“I urge Mrs May and her Treasury colleagues to pay careful attention to this parlous state of affairs and to take action, both to protect the consumer from the misery of unnecessary debt and also to protect the specialist agents and specialist tour operators in the UK from having to incur such nonsensical costs courtesy of our Fat Cat banking industry.

“Voters will doubtless thank her, too, for preventing a totally unnecessary increase in their holiday prices.”

Share article

View Comments

Jacobs Media Group is honoured to be the recipient of the 2020 Queen's Award for Enterprise.

The highest official awards for UK businesses since being established by royal warrant in 1965. Read more.