United faces protests for move to shift card fees

United faces protests for move to shift card fees

United Airlines, according to Travel Agent Central, has executed a controversial move in the arena of credit card payments. Rather than absorbing credit card fees like most other airlines, they have decided to place that burden on travel agents who book flights for customers. If a traveler wants to pay with a credit card, the travel agency will have to process the payment through its own merchant account and remit cash to the airline.

Mired in the economic crisis and facing increasing financial uncertainty, United Airlines recognizes the burden of credit cards and merchant accounts and has decided that travel agents should bear the brunt of those costs instead. This is not necessarily surprising since the airline industry is suffering as much as other businesses, but it has definitely raised the ire of travel agencies all over the United States.

For one thing, points out Travel Agent Central, there are 10 states in which it is illegal for travel agencies to pass on surcharges to customers. This means that, if they want to continue accepting credit cards for their clients' convenience, they will have to pay the additional cost out of pocket.

Furthermore, credit cards are the primary payment method among customers of travel agencies. Travel Agent Central reports that in 2008, 88 percent of customers paid by credit card when booking flights through agencies, amounting to more than 100 million transactions in that single year. Customers who travel for business, in particular, use either their own or their employer's credit card.

Travel agency organizations -- including the ATSA, BTC and IASA -- are rallying for legislation that prevents airlines from passing the buck, so to speak. It creates an unprecedented burden for travel agencies that have experienced a drop in sales themselves and could perhaps lead to other policies that would eventually send some businesses into bankruptcy.

Of course, there is more to this story than simple merchant account fees for credit card transactions. There are numerous risks assumed by the merchant (whether United Airlines or a travel agency) when accepting credit cards. Chargebacks, for example, would become the sole responsibility of travel agencies and will simply add to the costs they assume.

Time will tell on this issue as travel agency organizations battle United's policy and implore legislators to listen to their complaints.

Published: October 9,2023