ABTA is encouraging Members to submit evidence of violations of the Interchange Fee Regulation (IFR), which was intended to reduce overall charges and requires card providers to be clear and transparent about the constitution of charges. This follows a constructive letter ABTA has received from the Economic Secretary to the Treasury, John Glen MP, in response to the concerns it raised earlier this year around the high cost of taking card payments, especially for travel agents.
In his letter, the Minister recognised that retailers could incur additional costs and affirmed his commitment to ensure that the financial services industry delivers for small businesses, as well as consumers. The former Tourism Minister also declared his support for the travel industry, recognising the sector as an integral part of the UK economy.
The Minister acknowledged ABTA’s concerns about the IFR, which intended to tackle the high charges made by banks and other merchant providers to process card payments. While the regulation succeeded in capping the interchange fee at 0.2% for debit cards and 0.3% for credit cards, it would appear that other fees have been increased or introduced that have minimised or wiped out retailer savings in relation to overall card charges.
The Minister explained that he had instructed his officials to continue to engage with the industry and the Payment Services Regulator (PSR) to assess the impact of the IFR. The PSR has also been in touch with ABTA to request evidence of breaches. ABTA is now urging Members to share any evidence relating to:
Non-compliance with the IFR rates of 0.2% for debit cards, 0.3% for credit cards;
Lack of transparency relating to interchange rates being applied;
Failure to provide information on interchange fees at transactional level, if this has been specifically requested by the retailer;
Failure to provide information on card types, where this has been requested by the retailer;
Evidence of increases in other charges within the merchant service fee (such as scheme fees).
Mark Tanzer, Chief Executive of ABTA said: “The travel industry is hit particularly hard when it comes to the cost of taking card payments – a point we have been making to Government for some time. We welcome the commitment by Minister Glen for his department to work with industry and the PSR, to assess the effectiveness of the Interchange Fee Regulation.
“We’re encouraging Members to share evidence with us of violations of the Interchange Regulation, so we can pass this onto the Payment Services Regulator to investigate.
“We are already in contact with the PSR, who have confirmed they are currently undertaking compliance checks around the IFR and considering their priorities for the year ahead. We will continue to work closely with the Government and the regulatory authorities to ask that card charges are reduced to a reasonable level.”
ABTA has also been asked to input suggestions for the PSR’s annual work programme 2018/19, and is urging the regulator to prioritise effective enforcement, and greater transparency in the card payments market. In particular, ABTA is calling for a detailed examination of how acquirers and issuers apply additional charges, as well as concrete measures to enforce IFR provisions around the sharing of information on card types, which would enable retailers to correctly identify whether cards are consumer or corporate cards at the point of sale.
ABTA Members should send evidence through to: firstname.lastname@example.org