Travel agents turn to TTA in face of credit card crisis

The number of agents having problems with their merchant acquirers who have approached the Travel Trust Association has doubled in the past three months.

TTA operations director Gary Lewis said the association is receiving up to 15 enquiries a month from agents who are in danger of having their merchant services removed or their terms changed.

He said: “Travel has always been high risk, but now the banks are taking a harder line with travel agents who only have ABTA and ATOL bonding. The Royal Bank of Scotland and Barclays in particular have upped their level of concern about travel companies.

“There is pressure on agents because ABTA has not been able to cope with the losses [of XL Leisure and Freedom Direct], so the claims have been pushed back to the merchant acquirers.

He said banks were more confident in agencies that are backed by a trust account as the customers’ money is protected.

Advantage chief executive John McEwan said there had been no problems raised by the consortium’s members, but added: “We know the credit card companies are looking more scrupulously at the terms and conditions of dealing with agents.”

He said credit card companies imposing chargebacks and increased rates could also trigger problems for the trade.

“I have heard some credit card companies are levying charge-backs to agents where they have reimbursed customers (after a supplier failure), but believe the agent should be charged and have debited money from them. Some companies might decide it’s too expensive to deal with agents and rates will go up.”

MacIntyre Hudson principal Andrew Burnham said agents who change banks should be aware they could be seen as more risky.

“For those who decide to change banks to benefit from lower costs, there is the difficulty as a ‘new’ account-holder that you may find the bank is cautious with you for the first 12 months – particularly if your trading position is weak.

“To the banks, the travel industry is a real worry. For half the year, many companies make a loss, relying on a buoyant six months during the summer.”

Another industry observer warned the situation could be disastrous for the trade if it escalates. He said: “It’s a looming timebomb that could bring a lot of agents down.”

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