IATA will no longer mandate all its 242 accredited Philippine agencies to use credit cards for BSP payment transactions, to the relief of agencies who believe that the rule is an attempt by an airline group conspiring to run them out of business.
Of the IATA accredited agencies, only 46 are using credit card to transact while 196 don’t, a statistic revealed during a meeting in Manila among representatives of the Philippine Travel Agencies Association (PTAA), Philippines IATA and IATA Singapore.
Hence, “only the 46 IATA-accredited agencies already using credit card for BSP payment transactions will have to be PCI DSS (Payment Card Industry Data Security Standard) compliant” by March 2018, PTAA notified its members in a circular dated October 5. PCI DSS is a set of information security standards to prevent credit card fraud. Agencies failing to comply risk losing their IATA accreditation.
But IATA appears to have become more lenient as it “withdrew the sanction of two irregularities given for noncompliance with PCI DSS”. Instead, it leaves it up to individual airlines whether to accept credit card transactions from non-complying agencies, according to the PTAA Circular.
The circular also noted that “there will be different treatment for non-payment and short payment” of remittances which “has no consequence anymore on (agencies’) ability to ticket” unlike in the current IATA ruling.
Before the change, travel agents complained it would be cumbersome to change to credit card payment due to the many documentation required for accreditation. Also, many customers prefer cash over credit card payment, which comes with a three to five per cent charge. There are also instances when customers switched to agencies accepting cash payment to avoid the credit card fee.
Adkins Travel general manager Francisco Lim lamented that airlines are now in a competing relationship with agencies for ticket sales, and the latter has come out short-changed, citing IATA’s last year implementation of the shortened BSP remittance period to one week from 15 days.
He explained that cashflow has been a problem for agents, especially those handling corporate accounts, because they have to make weekly remittances to BSP but payment from clients take up to 45 days to come in.
To stay afloat, Lim said agencies had to take out loans from banks or from individuals with interest rates.
A travel consultant said the weekly BSP remittance contributed to the demise of some travel agencies.
Moreover, the president of a travel agency said she deliberately did not accredit with IATA because of the costly bond requirement and the weekly BSP remittance, claiming that it’s better for her agency to buy international tickets from IATA-accredited agencies.