Many airlines have introduced, or opted to retain, surcharges on
corporate card payments in Europe. The European Union's Revised Payment
Services Directive, or PSD2, which took effect on Jan 13., outlawed surcharging
of Visa and Mastercard consumer credit and debit cards.
The picture is highly fragmented, varying not only from airline to
airline but market to market, depending partly on how each country in the
European Economic Area—the EU plus Iceland, Liechtenstein and Norway—has
interpreted the directive. For example, British Airways is surcharging
corporate cards in the U.K. at 1 percent, up to 20 British pounds, but is not
surcharging any cards in most other countries. Air France-KLM is surcharging
corporate cards at 2 percent and Norwegian Air at 3 percent.
Lufthansa announced late last year that it would surcharge at 1.65
percent to a maximum of 25 euros for all cards not regulated by the Interchange
Fee Regulation of 2015, which effectively covers Visa and Mastercard consumer
cards only; American Express and Diners Club consumer cards are generally nonregulated
and also continue to be surcharged by some airlines. However, German newspaper
Die Welt reported that Lufthansa has postponed surcharging until mid-March,
owing to "technical challenges." A well-placed travel source told BTN
that Lufthansa's systems cannot yet identify with confidence whether cards
presented for payment are consumer or corporate. Lufthansa did not respond to a
request for comment.
Some airlines are not surcharging at all, a position some payment
experts had expected all airlines to take, owing to the complexities of
discriminating between different card types. Carriers that have eliminated all
surcharges include Ryanair and EasyJet, though EasyJet has charged since 2012 an "administration
fee" of 15 British pounds for all bookings.
The surcharging of corporate cards means that many companies in
Europe effectively face some kind of additional fee no matter which card type
they choose. The Interchange Fee Regulation treated individual pay corporate
cards—meaning the card is billed to the cardholder, not the employer—as "consumer
cards." Therefore, airlines no longer can surcharge them under PSD2.
However, issuers now earn very little from individual pay cards and consequently
have scrapped them or introduced transaction fees for corporate clients that
continue to use them.
Could the difficulty of avoiding additional fees of one stripe or another
lead businesses to shun corporate travel payments in favor of other methods,
such as asking travelers to use personal cards? Carlson Wagonlit Travel senior
director of global card products Clive Cornelius thinks not. "Corporates
are used to seeing a surcharge," he said, "and it is usually offset
to some extent by the rebate they receive from the issuer." Because
commercial cards give customers improved cash flow, the ability to control
spend by restricting merchant category codes and the ability to upload costs
directly into expense tools, he said, "the benefits still outweigh a
surcharge."
Correction: Jan. 24, 2018, 9:35 a.m. Eastern: This story has been updated to clarify that EasyJet did not introduce its administration fee in response to PSD2 but has had the fee in place since 2012.