Incentives to counter PSD2 still a 'grey area'

Speaking at accountancy firm RSM’s Travel Forum last week, Farina Azam, a partner with solicitors Travlaw, also confirmed most of her clients – particularly tour operators – had raised their headline price by a few per cent to offset the financial impact of the EU’s Payment Services Directive 2.

PSD2, which came into force on January 13, means travel sellers can no longer surcharge on card payments.

The industry has been coming up with various ways to offset the impact of the change, which is thought to be more detrimental to agents’ bottom lines than operators’ because the latter can dictate their prices.

Azam said there was nothing to prevent agents incentivising with alternative payment methods but “it cannot be a monetary incentive”.

She said non-monetary incentives could pose difficulties, and gave the example of an agent giving free airport lounge passes to customers who paid balances by bank transfers. “I am quite wary of non-financial incentives because… everything has a financial value,” she said.

Giving free insurance posed the same issue, Azam said, adding that the government had not given guidance on the topic. “It’s still very much a grey area,” she said: “Margins are very tight and it is difficult to absorb this level of fees.

“If you don’t want to increase the headline price or you are a travel agent and you can’t, one alternative is to apply a booking fee, but if you do that, you have to apply it to all bookings, otherwise it would be a card fee.”

PSD2 will remain in force along with other EU directives once Brexit becomes reality next year.