Abta has written to the treasury calling on the government to commission an urgent, and thorough, review of the UK’s card payments market.

More than half (58%) of respondents to its latest survey on the issue reported increased costs since the introduction of the European Union’s Interchange Fee Regulation (IFR) in June 2015

“Very few” have made significant savings, Abta said.

The association’s letter, co-signed by the Association of Independent Tour Operators (Aito), the Scottish Passenger Agents’ Association (SPAA) and The Advantage Travel Partnership, says a review is needed following what it called “the clear failure” of IFR, designed 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. But Abta says that other fees relating to card charges have been increased by card providers “to make up for the shortfall in revenue”.

Abta also wants greater transparency throughout the payments chain, and “more thoughtful language from the government” when explaining the changes.

The association says companies have been perceived to be profiting from card payment fees as the legislation creates a narrative that it is banning “rip off fees”. It also suggests a “common misconception, fed by media coverage” that the interchange fee of 0.2% or 0.3% is the total cost to companies. Some Abta members have reported total fees of 3% – over ten times higher.

Mark Tanzer, Abta’s chief executive, said: “When the European Union introduced the Interchange Fee Regulation and the subsequent Payment Services Directive (PSD2), 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.”

Travel agencies do not set the prices, instead earning their margins primarily on commissions. Abta says being in that position will “force” agencies to consider charging booking fees to cover their costs of procession card transactions. Alternatively, it says they may opt to refuse card payments altogether.

PSD2 was introduced earlier this month, and an industry-wide solution to the extra charges agencies have been incurring to process is yet to be found. Abta recently said some members were seeing costs rise by £20,000 as a result of PSD2.

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