Paying for Plastic

Paying for plastic

BCD Travel white paper examines move by airlines to reduce credit card merchant fees

ATLANTA, Aug. 5, 2010 – Merchant fees have become the single-largest distribution cost for airlines, and in recent years, several factors have led air carriers to search for ways to reduce or offset that cost. Unfortunately for corporate travel buyers, any likely move that airlines may take to reduce or offset merchant fees represents an increase in travel program costs.

A new white paper by BCD Travel, called Charge ahead: How airlines’ moves to reduce their credit card merchant fees drive up corporate travel costs , explores why airlines are considering a shift in the current merchant fee model and how that change would affect corporate travel buyers.

In addition, the white paper recommends steps corporate clients may take to address the threat to bottom lines and travel-process efficiencies posed by airline strategies to offset merchant fees.

Two distinct models for reducing or offsetting airline merchant fees have emerged: adding surcharges to airline tickets and blocking travel agencies from access to airline credit card merchant accounts. BCD Travel estimates that a company with an annual air spend of $20 million could see their costs rise by as high as $560,000 per year if all airlines adopted a surcharge. If airlines forced travel management companies to establish their own merchant accounts, it would add up to $600,000 per year to buyer costs.

Topics covered in the white paper include:

• Anatomy of a credit card transaction
• Why airlines are seeking to offset merchant fees
• Airline models for offsetting merchant fees
• The ramifications and challenges of merchant fee offsets
• The benefit of credit cards
• The case against airline merchant fee offsets
• Corporate options for responding to merchant fee offsets

BCD Travel’s white paper about credit card merchant fees is available for download in the Information Center at www.bcdtravel.com

paper download