Failures highlight fragility of industry services

The failure last month of Gold Crest Holidays was deeply regrettable, particularly for the customers, staff and partners affected after more than 30 years of trading. But the significance of recent travel company failures lies less in what they say about consumer behaviour, and far more in what they reveal about the fragility of the services the sector relies on to operate.

This is not a story about consumer demand. It is about the resilience of the services that underpin the travel industry, and the consequences when risk is allowed to drift away from where it was intended to sit.

The fact that three travel businesses collapsed in a single week in January is not simply a reflection of uneven trading conditions. It is a signal that the ecosystem supporting travel businesses is under pressure. If that pressure is not acknowledged and addressed, the consequences will not be driven by demand, but by the gradual withdrawal, repricing or restriction of the payment services travel depends on to function.

Where recent failures matter most is not in what they say about the health of the sector overall, but in what they expose about a long-standing misalignment between consumer protection, insolvency risk and payments. One that, if left unresolved, will make it materially harder and significantly more expensive for travel businesses to access the card payment facilities they rely on to operate.

And make no mistake, this position has been created by the travel industry itself. By allowing chargebacks to be routinely used as a proxy insolvency protection, all parties involved are effectively exploiting a role that acquiring banks were never intended to play. They are not part of the Package Travel Regulations, they did not sign up to underwrite insolvency risk, and yet they are increasingly being forced to do exactly that.

When the protection model fails

In the communications that followed Gold Crest’s collapse, customers who had paid by credit card were directed to seek refunds from their card issuer, while those who paid by other means were guided through the regulatory financial protection process.

This is not simply a pragmatic distinction. It is evidence that the current protection framework is not working as intended.

Under the Package Travel Regulations, a travel company failure should be met by its designated form of financial protection, whether that is bonding, insurance or a trust-based model. That protection exists specifically to ensure consumers are refunded in the event of insolvency. If it is functioning properly, there should be no requirement for a secondary layer of protection.

Acquiring banks are not part of the Package Travel Regulations. They are not referenced within them, nor were they ever intended to operate as a backstop for insolvency risk. Chargebacks were designed as a dispute resolution mechanism, intended for situations where there is an issue with the delivery or quality of a product or service.

Increasingly, however, chargebacks are being used as a proxy insolvency refund mechanism. That represents a fundamental distortion of purpose.

When chargebacks are relied upon following insolvency, risk no longer sits where regulation intended it to sit. Instead, it is shifted onto acquiring banks as an unintended and unpriced secondary layer of protection. This creates a double exposure scenario that benefits no one.

Crucially, this also distorts the pricing and underwriting of the primary protection itself. If consumers are routinely directed to claim via chargebacks, then the bond, insurance or trust model in place is, by definition, not absorbing the exposure it was designed to carry. Insolvency risk is underpriced at source and absorbed elsewhere in the system by institutions that never agreed to hold it.

Why this matters beyond payments

This misalignment is already reshaping how travel is underwritten, and it is doing so at speed.

In the final quarter of 2025, UK acquirers faced multi-million-pound exposure following the failure of FlyPlay. Since then, the collapse of Gold Crest Holidays, combined with two further recent failures operating under trust-based protection models, has compounded the problem.

The detail that matters is not the individual failures, but the pattern they reinforce. Even where primary protection is in place, insolvency outcomes are still cascading into the payments ecosystem. From an acquiring bank’s perspective, this creates the impression that no protection structure is reliably containing risk.

The response is predictable. Tighter underwriting, higher pricing, increased rolling reserves and more restrictive onboarding decisions. We have seen this before. During Covid, payment capacity for travel contracted sharply as acquirers reassessed exposure, reduced limits and, in some cases, exited the sector altogether.

Insurance capacity followed the same trajectory. The difference now is that acquiring capacity for travel is already at the lowest level it has been for many years. There is far less headroom in the system. If insolvency risk continues to be misallocated, payments capacity will constrict again as a rational response from institutions that have already lived through this cycle once before.

For travel businesses, the implications go far beyond access alone. Even where card facilities remain available, they are becoming materially more expensive, more conditional and more tightly controlled.

The margin reality travel cannot absorb

Travel is a low-margin industry operating in an increasingly price-sensitive consumer environment. Small percentage movements in cost have an outsized impact.

If acquiring banks price in higher insolvency exposure, those costs surface through higher merchant service charges, increased reserve requirements and delayed settlement of funds. For businesses already operating on thin margins, there is little room to absorb those costs internally, and limited ability to pass them on without damaging competitiveness.

Credit and debit cards remain the backbone of online booking and consumer confidence. If card acceptance becomes more expensive or more restricted, it directly affects a business’s ability to trade.

The regulatory timing cannot be ignored

The Package Travel Regulations consultation and conclusions were only finalised in December 2025, following years of industry consultation and policy work. This was a recently reviewed system.

Yet despite this, insolvency protection is still demonstrably falling back on chargebacks. That is not a criticism of intent, but it is a clear signal that outcomes are not aligning with policy design.If, immediately after regulatory review, acquiring banks are still absorbing insolvency losses, then the system is implicitly admitting it cannot fully carry the exposure it was designed to manage.

Why market solutions are emerging, and their limits

The emergence of acquirer chargeback insurance reflects a problem that has been visible for some time to acquiring banks. Sustained exposure to insolvency-related chargebacks has prompted a search for more measured, data-led risk transfer, particularly in relation to travel businesses that are otherwise well run and appropriately protected.

TMU Management’s decision to bring acquirer chargeback insurance to market sits within that context. It is designed to support acquiring banks with clearer visibility and confidence around specific chargeback exposure, and to help ensure that well-managed travel businesses are not penalised for systemic issues elsewhere in the market.

Crucially, this is not an alternative insolvency protection model, nor a substitute for the Package Travel Regulations. It is a targeted, selectively underwritten response to a clearly defined risk, not a fallback for inadequate primary protection.

A shared ecosystem risk

None of this should be read as an attack on protection bodies or regulators. Financial protection remains essential to the functioning of travel.

But when protection fails in practice, costs rise, services retreat and capacity contracts. That affects who can trade, how they take payments and at what price.

This is not simply a payments issue or a travel issue. It is a shared ecosystem risk.

If this remains unresolved, the cost will not be incremental. It will be structural, reshaping who can trade, how they take payments, and at what price.