Opinion: Get ready for new payment card fee rules or face some nasty surprises

No one likes nasty surprises, especially when it comes to profit.

The new ruling on credit card charges (PSD2) is a very significant one for our industry where margins are notoriously tight.  But are you ready?

From January 13 next year you cannot charge clients extra for paying by credit card, and that will apply on bookings made now where balances are due after the change next year.

This is of major concern for heavy discounting retailers and bed bank suppliers, which already seem to have margin challenges.

That said, while we discount very little at Miles Morgan Travel, it is still a huge hit in our profits and one that is hard to negate.

There are two routes that seem the most logical. One is to charge a booking fee for all clients.

I say all clients because you cannot differentiate between people who pay by card or those who pay by other means.

If you do, that is charging in another way and a breach of the new regulations.

This is a tricky route as we do not charge a booking fee, and I feel that while customers love our service, they won’t fancy paying an additional fee, especially those who don’t use a credit or debit card in the first place.

Encouraging other forms of payment is another route.

However, agents must be careful not to offer discounts to customers who pay by alternative methods as this could be seen as creating a charge for those who pay by card.

More and more of our everyday purchases are made via online banking.

You can pay for your Tube fare via an app on your mobile phone, so why not holiday deposits and balances too?

This is an area we have never paid attention to and one that I certainly will do from now on.

While an app might be some time away, promoting the ease of paying directly into our bank account with a little flyer with our bank details on is almost free and not only will it help us avoid card fees, clients will find it easier.

This is a win-win and has to be the way to go.

I would like to applaud Aito. Its proposed 0.5% increase in commission (to offset the charges) would help us agents cope with the changes.

This behaviour should be praised. Who else might follow to help us? The bottom lines of the big two or three players will surely take a hit with their growing online sales, so maybe third-party distribution will start looking cheaper again.

Will they become more agent-friendly?

Now my chance to moan. It seems unfair that the law says we can’t cover our costs when the banks are not only charging us to process these payments but also customers when they don’t pay the balance on their card in full.

What I will say is don’t get caught out with a nasty surprise next year.

How much is it going to cost you and what can you do about it? At Miles Morgan Travel we have a plan.

Make sure you have one as nasty surprises aren’t good when it affects the most important part of your business – its profit.