Advantage Profit Protection Plan is published ahead of PSD2

Advantage Travel Partnership has published a 12-page Profit Protection Plan for its members – a direct reaction to the upcoming change in law that will require retailers to absorb charges for transactions made by credit and debit card. 

The consortium’s guidance paper is designed to give agents support, advice and practical solutions in specific areas including: operational changes, money-saving opportunities and increasing income to protect their businesses ahead of the EU’s Payment Services Directive 2 (PSD2), which comes into force on January 13 next year.

Advantage group commercial director Paula Lacey said: “We hope our members find the profit protection guidance helpful and insightful and it inspires them to take steps to protect their businesses ahead of PSD2 coming into force.

“We cannot emphasise enough the significance of PSD2 and how taking action now can help lessen the impact it will have on business. The Advantage membership is broad and diverse and one size does not fit all and there is no single ‘silver bullet’ solution but by publishing the guidance paper we are offering some practical advice to help our members understand the impact and mitigate the additional costs resulting from the new legislation.”

In the first instance Advantage members are advised, if they have not worked it out already, to calculate the annual amount paid in card payment merchant fees and the resulting percentage of profit.

The consortium is recommending an over-estimation of the 2016/17 merchant fees as it is predicted that consumers will increase card payment usage post abolition of card payment surcharges.

It has developed a simple downloadable calculator tool so the potential cost to a members’ business can be calculated using total turnover by card type and merchant rates.

The paper’s first section is devoted to operational changes, with suggestions to help cover the shortfall caused by the loss of surcharge income. The next section covers increasing income with Advantage suggesting that the imminent implementation of PSD2 is a reminder to businesses to review all costs and investigate opportunities to increase income, be it by renegotiating commission with suppliers revising and tracking conversion or selling ancillary products.

Sales techniques, such as upselling, motivating and incentivising sales staff and new business leads are all detailed in the paper.

Finally, money-saving opportunities are reviewed, with tips on how to shave costs across a range of operational tasks such as printing in black and white over colour and using Freephone numbers. The Advantage Business Development Team has also developed a directory of third party supplier ‘partners’ who offer quality, value services, including financial planning, HR and sales training.

Corporate and commercial payment cards are not included under the new law, which means Advantage business travel members will be less affected by PSD2, unless they also accept clients personal credit and debit card for payments.

Advantage has offered its support to Abta in its government lobbying campaign to reduce the handling fee charged by a customer’s card company to the agent’s merchant acquirer.

Advantage managing director Julia Lo Bue-Said has urged travel companies to assist Abta by providing evidence of the detrimental effect on businesses, which they require ahead of a statutory review currently set for 2019.

As widely reported, the major impact on members’ businesses is that they will no longer be able to pass on payment surcharges to their customers, for transactions made by credit or debit card, including those made by Mastercard, Visa, Amex, PayPal and Apple Pay.

To combat the effect of PSD2 on an agency balance sheet, members are encouraged to create their own personalised action plan to assess the potential impact and devise counteractive strategies before the directive comes into effect.