The Adrian Loveridge Column – Opportunity for Travel Industry to Renegotiate Card Processing Fees

Adrian Loveridge

Our British and many of our Continental European holidaymakers look like they are in for a little relief next year. The current annoying and described by HM Treasury as ‘rip-off ‘ surcharges which apply to a large percentage of flight and holiday bookings both in-store and online are scheduled to be banned from 13th January 2018 under the second EU (European Union) Payment Service Directive, known as PSD2. Initially this will affect payments by Apple Pay, PayPal, credit and debit cards and American Express.

The description by a British Government department as a ‘rip-off’ is more than a little hypocritical because a number of state entities also levy these exploitative charges including H.M. Customs and Excise and the DVLA (Driver Vehicle and Licensing Agency) along with several local authorities.

According to consultancy firm, RSM (formerly Baker Tilley), it will cost the UK travel industry up to GB Pounds 150 million, presumably annually. The current rules do not allow businesses to profit from surcharging but the actual costs they incur can be passed on.

TravelMole recently reported that the UK Card Association’s latest card expenditure statistics for the year to April 2017, shows that consumer credit card spend with British travel agencies was GB Pounds 7.5 billion. Based on charges of between 0.5 per cent and 2 per cent of the transaction value, this indicates a cost implication in the range of between GB Pounds 35 million and GB Pounds 100 million across the sector.

RSM’s head of travel and tourism, Ian Bell, stated that ‘as a result, travel operators face some difficult choices as to whether they choose to absorb the additional costs or pass them on to consumers in the form of increased headline prices or new booking fees’.

Of course travellers use credit cards to pay for travel arrangements for any number of reasons, including staggering installments over a period of months and for added consumer financial security if there is any doubt that the operator carries sufficient failure protection.

The new ban builds on an EU directive originally launched in 2015 which capped the ‘interchange fee’ paid by the merchant at no more than 0.3 per cent for credit cards and 0.2 per cent for debit cards. At the time, the EU noted that the surcharges, which are only supposed to reflect the cost of processing payments, generated as much as Euro 13 billion a year across Europe. While there appear to be no recent figures for the UK, the British Treasury says the surcharges generated a ‘best estimate of GB Pounds 473 million in 2010.

Some merchants have taken surcharges to a ludicrous degree by applying a ‘service fee’ on top of an ‘order processing fee’ and occasionally a ‘facility fee’. The ban is almost certainly going to negatively impact on the smaller tour operators and independent travel agents disproportionately and this in itself may help stifle real competition and could lower service standards.

Perhaps this now represents an enormous opportunity for the entire travel industry with a consensus to go back to the banks and financial institutions’ to re-negotiate to reduce processing and merchandising fees together with other handling charges.

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13 Comments on “The Adrian Loveridge Column – Opportunity for Travel Industry to Renegotiate Card Processing Fees”

  1. FearPlay July 31, 2017 at 4:06 PM #

    Maybe the time is right to renegotiate what is happening at the GAIA with our customers also. Last Friday evening my flight left St Lucia with destination Barbados direct. After a 30 minute flight it took 45 minutes for me to clear Immigration and you should have seen the line behind me. Some of those people could still be there in line. All I could think about is the passenger (customer) who begins a trip to Barbados out of Europe with family. God knows what time they have to get out of bed to take a two hour drive to the nearest international airport keeping in mind that check-in time is probably 3 hours before departure. Follow this with an 8 hour flight to Barbados and then an Immigration line that stretches to the horizon and another for Customs as they have recently checking almost every piece of luggage. Somehow, a sign in Arrivals reading “Welcome to Barbados” just does not cut it. A ground hostess who was completely out of her depth did not add any value to the experience.

    Like

  2. David July 31, 2017 at 5:32 PM #

    @FearPlay

    Clearing immigration and customs at GAIA is an arriving passenger’s worse nightmare. It has always been slow with the manual checking of baggage by the security forces behind the scene but it has deteriorated of late and now you have to throw in this go slow business. What has Barbados decscended to?

    On Mon, Jul 31, 2017 at 8:06 PM, Barbados Underground wrote:

    >

    Like

  3. Seth August 1, 2017 at 11:12 AM #

    Certainly entering Barbados is perhaps the worst in the free world so far as time in line goes. There is a handicap line at immigration, but none at customs. That needs to be corrected. My last trip to Barbados there were 2 custom agents checking bags and 8 immigration agents checking passports. Custom agents seem to spend twice the time checking luggage as immigration agents do checking passports. Obviously designed to create a long line. Entering Barbados is a nightmare.

    Like

  4. David August 1, 2017 at 6:12 PM #

    Looks like the LIAT Board of Directors sees merit in elevating Julia Riefer-Jones to CEO.

    Like

  5. Vincent Haynes August 2, 2017 at 11:03 AM #

    With inflation rising in the UK, the government is facing higher costs of borrowing, according to one investor.

    Read more: http://on.ft.com/2tVqLcO

    Like

  6. Vincent Haynes August 2, 2017 at 11:04 AM #

    Like

  7. Vincent Haynes August 2, 2017 at 11:58 AM #

    I wonder if this will affect us?

    In a drive to modernise the Saudi economy.
    Saudi Arabia to open luxury beach resort where women can wear bikinis
    telegraph.co.uk
    http://trib.al/JpuDbOK

    Like

  8. David August 2, 2017 at 5:29 PM #

    Another Luxury Resort Planned for St Lucia

    CASTRIES, St Lucia, Saturday July 29, 2017 – A 120-room luxury hotel with 40 private residential villas will open on St Lucia’s southwest coast in another two years.

    Fairmont St Lucia at Sunset Bay, to be built on 25 acres and 1,870 feet of beachfront, is set to start accepting guests in late 2019.

    The project will fuse contemporary design with preservation and enhancement of the natural landscape, conserving micro-ecosystems of small mango groves and lush mountain streams, protecting the beach from tidal erosion, and investing in mature landscaping instilling a sense of privacy.

    Built into a natural amphitheater, each of the guest rooms, suites and residential villas will offer unobstructed views across the bay. The resort will feature four restaurants and bars; a 9,000 square foot Fairmont spa; outstanding pool facilities including a main resort pool, children’s pool and adult pool with cabanas; private marina with moorings for deluxe yachts; and approximately 10,000 square feet of flexible indoor and outdoor meeting and function space.

    The Fairmont experience will include adventure activities such as paddle surfing, mountain biking, and hiking to discover spectacular nature trails; pampering poolside or at the spa; and connecting with local culture in the nearby fishing village, the source of many local foods and ingredients featured on resort menus.

    For guests looking for a more permanent secondary home or getaway retreat, Fairmont St Lucia at Sunset Bay will offer 40 private Fairmont-branded residences.

    “We have very high expectations for this exciting project. Together with Fairmont, and our renowned design and construction teams, we will work diligently to ensure the highest quality product and guest experience. We are confident that we have assembled an extremely professional and motivated team that will create a remarkable luxury resort that is unique for the island,” said Georgi Vassilev, Chairman of the Board of Directors, GP GROUP JSC.

    “We are also focused on creating additional value for the local community, not only by providing employment opportunities, but also by investing in the development of infrastructure in the region.”

    Fairmont St Lucia at Sunset Bay will join Caribbean and mid-Atlantic sister properties Fairmont Royal Pavilion in Barbados, and Bermuda’s Fairmont Southampton and Hamilton Princess & Beach Club, a Fairmont-managed hotel. Fairmont currently has more than 70 hotels worldwide.

    “This resort marks the continued expansion of Fairmont’s rapidly growing portfolio of highly sought after luxury vacation resorts around the world,” said Kevin Frid, Chief Operating Officer, North & Central America for AccorHotels, a hotel group of which Fairmont is part..

    Like

  9. Hants August 2, 2017 at 5:39 PM #

    @ David,

    wonder what “concessions” they getting.

    Like

  10. David August 2, 2017 at 5:57 PM #

    @Hants

    Have a read of this article, something was promised! (let Google be your friend)

    http://bernews.com/2013/07/crockwell-pleased-to-pass-pink-beach-act/

    Like

  11. Hants August 2, 2017 at 7:19 PM #

    We still arresting Tourists for $7.50 in marijuana.

    AN AMERICAN VISITOR was ordered to pay costs of $250 dollars today after pleading guilty to the possession and importation of 1.5 grammes of cannabis worth $7.50.

    Like

  12. Hants August 2, 2017 at 7:30 PM #

    We all know that the other Caribbean countries will do everything they can to “facilitate

    foreign investors”.

    Barbados may need to find an alternative to the current Tourism model.

    Like

  13. David August 5, 2017 at 6:10 AM #

    Beaches hotel development not likely before 2020

    By Marlon Madden on Aug 05, 2017 12:56 am

    Despite several delays, the planned construction of a Beaches Resort at the site of the old Almond Beach Village in St Peter is still on the cards. However, the local communications spokesman for the Sandals hotel chain said it was unlikely that the new resort would open its doors before the year 2020. “Hopefully by […]
    What is going on with Butch? How will the delay of Beaches impact economic recovery plan of government? Let us hear the analysts please!

    Read in browser »

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