February 14, 2019
In January 2018, the process of surcharging – extra fees of up to 20% that businesses levied on card payments – was banned under the European Payment Services Directive (PSD2). The roll out of the new regulation has forced companies across all industries to absorb the additional cost from transactions or redirect the cost back to the consumer. Concerns were voiced from the travel industry, in particular, as it had become common practice for companies to apply surcharging as part of their operations, particularly travel agents with big-ticket items and already slender margins.
PSD2 also brought with it Open Banking to the UK, which required banks to open up their payments’ infrastructure and customer data to third parties. This legislation has paved the way for businesses to develop new payment options for customers – and has been welcomed by the travel industry.
New PSD2 legislation on the horizon
But the change is not over. There is still more to come from PSD2. In September 2019, PSD2 will introduce Strong Customer Authentication (SCA), which adds an additional layer of security when making electronic payments or transactions.
Surcharging restrictions came first in January 2018 and will be followed by SCA later this year, so you can be sure that the European Directive PSD2 will continue to introduce new regulations to protect businesses and consumers alike well into the future. To remain competitive and protect reputation and trust, travel intermediaries must continue to provide their customers with a seamless payments experience, while also introducing technologies such as virtual cards that will help facilitate smoother B2B transactions.
ENDS