review
the IFR in 2019 and is
heavily tipped to
recommend scrap- ping the cap exemption for all commercial cards.
PSD2 – SURCHARGING
One aspect of the comprehensive PSD2, which took effect in January
2018, is that it outlawed surcharging by merchants on cards that are subject to the IFR cap – in other words Visa and Mas- tercard consumer cards. The upshot is that while some airlines, such as Ryanair and Easyjet, have ceased surcharging all cards, others now surcharge only Visa and Mastercard corporate cards, plus American Express and Diners Club. The picture is highly fragmented.
British Airways, for example, is surcharg- ing at one per cent (up to a maximum of £20), while Air France-KLM is surcharg- ing at two per cent and Norwegian at three per cent. All these figures apply to the UK.
In some other EU countries, these
surcharges do not apply. “PSD2 leaves an option to EU member states to imple- ment a complete ban on surcharging, including on all corporate products,” says Colin O’Flaherty, general manager UK for global commercial services, at American Express. “We see more and more member states opting for such a full ban.” In the UK, however, the combined
effect of IFR and PSD2 effectively leaves corporate card clients with an unpalat-
IN THE UK THE COMBINED EFFECT OF IFR AND PSD2 EFFECTIVELY LEAVES CORPORATE CARD CLIENTS WITH AN UNPALATABLE CHOICE
able choice: individual pay cards (if avail- able at all), with no airline surcharges but no rebate either, plus a fee imposed by the issuer; or corporate pay, with airline surcharges but a rebate and no issuer fee.
PSD2 – STRONG CUSTOMER AUTHENTICATION Coming some time in 2019, once details have been worked out, is a requirement under PSD2 for strong customer authentication (SCA) of cardholder- not-present transactions. SCA is when the person making the payment must provide additional verification of their identity, such as an online purchaser entering a PIN number texted to their phone by the supplier. SCA nearly proved calamitous for
corporate travel. It is palpably unwork- able for lodge (a centrally billed account “lodged” with a travel management company) and virtual cards, where there is no identifiable individual cardholder who can provide verification. Fortunately, furious lobbying by the card and travel industries managed to secure an exemp- tion for “dedicated corporate payment
processes” in the regulatory technical standards governing authentication. The catch is that precisely what “dedicated corporate payment processes” means is not clear. The consensus, says CWT’s Cornelius, is that “lodge and virtual cards will be exempted but plastic corporate cards will not. Consequently, if travellers try paying with a corporate card for a reservation through a travel management company, that could prove to be a problem,” he explains. “Some- times we don’t take payment until a few days after the booking. If a traveller receives a one-time pass- word two or three days later, will they know what it is for?” Pend in g clarification from regulatory authorities,
card
and travel companies are trying to figure out technical solutions and regulatory workarounds, but the consequence could be a compelling argument for shifting as many bookings through TMCs as possible to payment by lodge or virtual card.
BREXIT BLUES
Absence of detail about how the UK will exit the EU is making the future of all pan-European business arrangements deeply uncertain, and
22 BBT CORPORATE CARDS SUPPLEMENT 2018
In association with
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