Credit card merchant fees are a hot topic in the travel industry today.

One example of many is when United Airlines communicated to 28 small agencies this summer for what seemed to some as an experiment in changing the system. The airline informed these agencies that they would no longer be allowed to process credit card purchases through United’s merchant account but would be required, instead, to use their own merchant accounts starting July 20. An interesting point is that UATP cards were excluded.

Complications ensued as agencies searched for payment processing alternatives, and such recommended alternatives as ARC, the airline-owned bank settlement plan for travel agencies and designated Corporate Travel Departments, balked at the idea of processing airline transactions. The agencies, with the backing of the American Society of Travel Agents filed a complaint with Congress and with pressure from lawmakers won a 60-day delay for implementing the change.

So what does such a move mean for a corporation’s travel budget — and why should travel managers be concerned?

A recent survey of 143 corporate travel professionals conducted for AirPlus International reveals that a good number of them may not know the answer to that question, and that industry education in the credit card economics of travel is overdue. While less than 1 percent of respondents characterized their knowledge of credit card economics as none, 22% said it was minimal and 60% responded that their insights were simply general.

There were some areas where most respondents agreed, however, when asked about the differences among cards. There was a general acceptance that the cost paid by merchants to accept a credit card can vary significantly between cards and that the rate of acceptance of a card has an impact on usage. There was widespread understanding that some credit cards provide better data than others and that rebates could vary widely among credit card suppliers. While the value of better data and big rebates are obvious for corporations, the holistic dynamics of credit card pricing, merchant fees and end-user incentives may be less understood.

When the issues of distribution costs and merchant fees rear their heads, corporate travel professionals need to understand the dynamics of credit card economics and be ready to make decisions that are in their company’s best interest.

Download the full report for complete results:

AirPlus…The Wire October 2009 (PDF, 257 KB)