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CAA’s credit card refund policy ‘is pushing up transaction costs’

A merchant acquirer has accused the Civil Aviation Authority (CAA) of “hiding behind” the Consumer Credit Act when travel firms fail and said it was pushing up the cost of card transactions.

The CAA can redirect consumers who have booked direct and paid by credit card to their card company for a refund when an Atol-holder fails, in line with consumer-credit law.

First Data merchant solutions general manager Phil Curtis said: “Atol hides behind the Consumer Credit Act.” He told the Elman Wall directors’ conference in London last week: “The CAA relies on the credit-card industry to refund passengers.” Curtis said companies face higher credit card fees as a result.

The problem does not apply to retailers, since the relevant section of the Consumer Credit Act (section 75) does not apply to payments accepted as an agent for a supplier.

Curtis said: “I find it perverse that one sector allows another to underwrite its liabilities. Travel is a risky business. But we just have to allow for it.”

Sunvil managing director Noel Josephides told Travel Weekly: “This is one of the biggest issues with the Atol system. If it paid out for everything it would be a lot more credible and tour operators would not have to pay bonds to merchant acquirers.

“The whole thing should be pushed on to the Air Travel Trust Fund once it is in credit.”

Curtis agreed, saying: “Bonding is a double whammy. Travel firms have to stump up for bonding without it protecting us.”

A CAA spokesman said: “We have commercial agreements with most merchant acquirers. It is only where there isn’t an agreement that we handle claims under Section 75 of the Consumer Credit Act.”

Barclaycard added an extra ‘sector management charge’ to travel firms’ card transactions this summer.

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