This week saw the Reserve Bank of Australia (RBA) recommend the scrapping of credit and eftpos surcharges, a move that sent a collective chill down the spines of many travel advisors who know too well that such fees are essential for maintaining profitability in a climate of razor thin margins.
The argument from the RBA is that in an increasingly cashless society, fees on credit cards and EFTPOS transactions are becoming increasingly unavoidable for consumers, arguing that abolishing them across the board would benefit Aussies shoppers to the tune of $1.2 billion per year.
However, that view was contested in extremely pointed terms by the Council of Small Business Organisations Australia (COSBOA), which said the figure put forward by the RBA was nothing more than “a mirage”.
Part of the rationale for the stinging criticism is related to transparency, with the organisation arguing that small and medium enterprises (SMEs) will simply fold the lost revenue from surcharges into the price of goods and services, rubbing out any intended consumer benefits and unintentionally eroding the trust between merchants and customers.
“The proposed ban on surcharges will only disguise the cost of card payments, rather than eliminate them, and this could mislead consumers and push small businesses to raise prices across the board,” the COSBOA said.
Travel companies in Australia are especially vulnerable to such a move, with the RBA’s own research showing SMEs – which make up roughly 90% of the travel sector – pay significantly more in merchant fees than large retailers.
However, the RBA claimed the sting of losing the surcharge revenue would be offset by its other proposal to lower the cap on interchange fees paid by businesses.
Reducing interchange caps would benefit small businesses the most, the RBA argued, as they tend to pay fees closer to the existing caps.
On this front, industry was more supportive but also felt pushing back on the big banks and financial institutions must go further.
One of the travel executives to weigh in this week was Helloworld Travel’s COO and Executive Director, Cinzia Burnes, who was adamant that any reduction in credit card and EFTPOS surcharges must be matched by corresponding cuts in bank fees and interchange fees.
“Otherwise, it is the small business owners who continue to shoulder the cost,” Burnes observed.
House of Travel Chief Operating Officer, Grant Campbell, told our sister title Travel Daily the proposed changes would disproportionately impact travel advisors, in that transactions often extend into the thousands of dollars.
“This context is critical as card fees can be a high cash value as a result, which would heavily impact the feasibility of some travel advisors if they had to absorb them – this is not comparable to paying a few cents as a card fee for a coffee,” Campbell said.
Perhaps the strongest ammunition fired against the proposal came from Australia Travel Industry Association (ATIA) boss Dean Long, who cautioned that without equalisation of interchange fees and unfair scheme rules, many businesses won’t be able to absorb the costs and will therefore be forced to reduce services or increase prices.
“This change must not proceed without comprehensive reform to ensure fairness for businesses and choice for Australians,” Long said, adding that nobody wants a situation where credit cards are no longer accepted.
In other news, and Prime Minister Anthony Albanese was attempting to thaw the very thick sheet of ice between Australia and China this week, with tourism at the heart of his olive branch.
While in Beijing to discuss mutual economic benefits and the dialling-down of political tensions, Albo used the forum to launch a major deal between Tourism Australia and Trip.com.
The Memorandum of Understanding will see a range of travel packages launched through the OTA to incentivise greater Chinese visitation to Australia, which ABS figures over the last few months show have plateaued at around 70,000 inbound trips a month.
After a bumper start to the year in January and February seeing close to 250,000 trips made by Chinese tourists, the number has settled at a lower but respectable volume.
However, given China was Australia’s number one source market, both in terms of overall numbers and economic spend, prior to the pandemic, Tourism Australia is no doubt very keen to pull out all the stops to resurrect China’s challenge to the dominance of Kiwi tourists.
In a further complicating blow to the tourism sector, ABS figures also show a slowdown in US tourists coming to our shores.
The trend is in line with several American surveys which suggest many of its citizens are pivoting to domestic or short-haul trips during the volatile economic climate under President Trump.
May was the lowest number of US visitors recorded for the year at 42,360, falling away on the close-to 50,000 posted in April, and a far cry from the 83,000 American visitors in March.
Elsewhere, Travel Daily broke the news of Spencer Travel making the decision to sell its corporate division after more than a quarter of a century. The buyer is LodgeLink, and will see Spencer Travel now operate as two distinct entities:
- Spencer Group of Companies (SGC) – Corporate Travel Division.
- Spencer Travel Holdings (STH) – Leisure, Wellness, and Independent Contractor Model.
In announcing the news, founder Penny Spencer said it was “both a reflective and exciting moment” for her.
“After 26 incredible years, I’ve chosen to transition the corporate division to a trusted partner who shares our values and commitment to service. This evolution enables me to focus on the future of leisure and wellness travel, and to support the next generation of travel entrepreneurs through new and emerging business models,” Spencer said.
And finally, in Clive Palmer’s gift that keeps on giving, we reported on the latest update about the refloating of the Titanic, or Titanic II as the case may be.
Yep, you read that correctly.
For those who are unaware, mining magnate Clive Palmer has been working on the unusual cruise dream of reviving the route that was never completed by the original Titanic for some time now, with many unsure as to the ambition’s bona fides. He first floated the idea, pardon the pun, back in 2012 to mark the centenary of the original ship’s ill-fated sinking.
But this week we learned that Titanic II has a flagged date of June 2027, a statement from Palmer’s company Blue Star Line said.
If the project does indeed go ahead as stated, please forgive me for not being the first person to sign up to the maiden voyage, as I consider myself to be somewhat of a history buff and one who believes that those who disrespect or ignore history are doomed to repeat it – and especially in this case, nobody wants that.
Have a great weekend everyone.
