A note about credit cards

You may have seen on our booking form that although we accept credit card payments, it is our policy to take only one payment per booking of up to £1000 by credit card, should clients wish to use one.  We ask our clients to make any further/subsequent payments by debit card or bank transfer, please. Although only a small minority of our clients usually wish to pay by credit card we’re aware that our policy is different to some other agencies’ and we’d like to explain why we’ve chosen to do this.

In January 2018 the UK government passed a law banning retailers from charging a fee to accept payment by debit or credit cards. This was brought in to protect consumers from unscrupulous companies who were charging far more than the cost of the transaction.  However,  we have only ever passed on the exact fees we are charged by the card provider for processing the payment.  For a small business like ours, this varies from 0.6% for debit cards to over 2% for some types of credit cards and is set to go up in 2020.

Whilst we applaud the effort to create transparency in retail and prevent consumers being overcharged,  we feel the government underestimated the effect that having to absorb card charges would have on small businesses, which don’t have the volume of sales to negotiate the sort of low transaction rates that large retailers can.  They also looked at the margins made by general retail (ie clothing/food), on which gross margins average 40-60% and felt that a 2% loss could easily be absorbed. In the travel industry by contrast, the gross margins on some arrangements can be as low as 5%. The loss of 2% of the cost of the booking when clients pay by credit card is therefore too much to absorb for companies in our industry.

The travel industry (individual companies as well as well-respected trade organisations such as ABTA)  has lobbied the government that travel retail should be considered as an exception to the law without success.  Travel agencies and tour operators have therefore had to make a choice on how to deal with this challenge, and the majority of agencies have simply raised their prices by an average of 2% across the board.  Although we sell a premium product, we strongly believe that clients shouldn’t have to pay over the odds for things that have no effect on the quality of the holiday, and this is why we have always made a big effort to avoid unnecessary overheads such as fancy offices and expensive advertising campaigns.  We think credit card surcharges fall into the same category of unnecessary overheads, and that our clients would not wish us to apply a 2% surcharge to all bookings “just in case ”  Looking at booking patterns in the five years running up to the change in the law, we saw that the majority of our clients chose to pay by BACS and debit card rather than pay the card transaction fee on a credit card payment.   After the law came in, we felt that adding 2% to all our prices would unfairly penalise that majority of our clients by essentially charging them the cost of the fees regardless of which way they paid.

So we came up with a compromise. We would absorb the cost of all debit card transactions and up to £1,000 per booking of credit card fees.   The ability to pay a proportion of the booking by credit card means that clients who wish to avail themselves of any credit card benefits they might get with regard to travel, can do so.   We find that most perks such as travel insurance or consumer protection kick in with a deposit payment, or partial payment for the holiday and do not require full payment on the same card.  For the small minority of clients who have credit cards which only provide insurance or consumer protection if the entire booking is purchased with a card, we are usually able to come to a separate arrangement on a case by case basis – we don’t want anyone to be disadvantaged by our policy which is in actual fact designed to help our clients, rather than hinder them.

We are permitted under the new law to pass on to clients the transaction fee for the use of business credit cards, and any non-EU credit and debit cards. Therefore, if paying with one of those there is no upper limit to the amount which can be paid for with a credit card, but note, the relevant transaction fee will be applicable.  We are happy to provide proof of the rates charged to us by our card services provider with a full official rate sheet on request – the rate is currently 1.95% for both credit and debit cards if issued outside the UK or EU. 

We are sorry for any inconvenience our policy may cause to our clients but we hope this now explains our decision. We do not wish anyone to be seriously disadvantaged by our policy and are happy to discuss alternative methods of payment on a case by case basis.