With the new year well under way, the first of the challenges of 2018 to hit the travel industry is upon us.
The EU Payment Services Directive comes into force from this week (13 Jan) where charges can no longer be applied to credit card payments by UK companies to consumers. It also applies to PayPal and Apple Pay processing. The government intimated that Guidance Notes would be issued last September, but they never appeared, indeed it appears the banks who have had to make major changes to their operations to comply, only got guidance notes the week before Christmas.
Some tour operators, including some SPAA Associates, have gone some way to try and help agents mitigate this loss of income by increasing their commission, and whilst in the minority, they are to be congratulated on the move. However, whichever way you look at it, the cost to an agency for every £2 million worth of sales, could be in the region of of £3k to £5k. The Directive, as with many other things governmental, was never meant to penalise agencies to the extent it might do.
However, it is now here, and we have to deal with it. There is no one-stop solution for this, but it does mean as a company, agencies need to understand, if you aren’t already, how much income was received in credit card charges last year, to verify the scale of the potential loss. Many agencies are taking steps to change the way their customers pay, offering more ancillaries to offset the loss of income, and even looking ever more closely at their sales policy. It’s either that, or charging a flat service fee for all bookings, whether paid by credit card or not, but perhaps the high street travel industry isn’t quite ready for that move yet.
The good news is that with continued expansion at Scottish Airports, and with several estimates predicting more and more people are prepared to travel, if we can capture at least part of that, the more it will offset the downside of the credit card issues.
Welcome to 2018 !!