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AirPlus Eyes EU Regulation For 127K Corporate Cardholder Losses

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Corporate payments company AirPlus International said it lost 127,000 corporate cardholders in 2016 as a direct result of the European Union Interchange Fee Regulation, resulting in $12.8 million in losses, the company said this week.

AirPlus released the information as a warning about the impact of these regulations on commercial cards, according to reports. The company said it lost the funds because of rules, which took effect in December 2015, that capped interchange fees but exempted commercial cards from the cap.

But in Germany, where AirPlus is based, payments regulators interpreted the legislation to mean individual liability cards, not individual pay cards, are subject to the cap, and AirPlus’ corporate cards are individual liability. In response, AirPlus said it gave clients two options: Accept a fee or change the card to corporate liability.

According to the firm, 17 percent of its customers decided not to use the corporate card any more and forewent issuing payment cards to employees.

The company is also highlighting another area of EU regulation that impacts its products: authentication requirements under PSD2.

“At the moment, it is completely unclear how we can implement this,” said AirPlus Managing Director Patrick Diemer in an interview with BTN this week, referencing the EU’s PSD2, slated to take effect in January 2018. PSD2, or the revised Payment Services Directive, will include rules that require cardholder-not-present payments to use strong customer authentication verification. What the European Banking Authority will require, reports explained, is that authentication measures require the cardholder to provide something only they would know, like a password, or something only the user possesses, like a PIN, or biometric identification.

According to Diemer, this makes no sense for commercial cards, as the corporation is the cardholder – not a single user.

“In business travel, the cards are issued to corporations, not consumers,” he explained. “There is not an identifiable person sitting in front of the screen.”

In corporate travel specifically, sometimes there is a third party, like a purchasing platform or online booking platform, that could thwart automated booking and payments, the executive added.

This isn’t the first time AirPlus has voiced its opinion on EU payment regulations. Last year reports said the company said it would replace individual pay corporate cards with ones that are considered commercial cards and therefore exempt from interchange fee cap rules.

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