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Atol protection ‘needs to be better aligned with payments firms’

The Atol customer protection scheme must be better aligned with payments firms as the sector moves to greater use of trust accounts, according to a leading merchant acquirer in travel.

A consultation on the latest Atol reform has closed with industry regulator the Civil Aviation Authority having sought views on segmenting customer money from working capital and a more risk-based approach.

Paysafe, a merchant acquirer that specialises in travel and which launched its own safeguarding trust arrangement three years ago, says it sees trusts as the future as traditional bonding disappears.

However, speaking ahead of next month’s Travel WeeklyFuture of Travel conference, Daniel Stanbridge, senior vice president of merchant risk, said there needs to be better coordination.


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“The concept of Atol trusts is great. But operationally there needs to be further alignment across the industry,” he said.

“If you look back to the chaos at the beginning of Covid, you had all these different entities overseeing payments for merchants and it was all pretty disjointed.

“So, having funds go into an Atol trust is great, however, unless the acquirers have recourse to those funds it doesn’t offer that much comfort.

“To give an example: if there are merchant failures the Atol trusts will pay out to the consumer, which is fine, but they will do that via bank wire.

“What that means is if a consumer is savvy enough they can still raise a chargeback and you can get the concept of double-dipping.

“Unless those refunds are done back via the card network it doesn’t negate issues for the acquirer or the card schemes.

“There definitely needs to be a greater alignment about how that flow of funds move into the industry but then back out through the payments systems.”

Simon Chandramani, vice president sales for Europe, said: “What Atol is doing and what chargeback protection on the card does is one and the same – they are trying to protect the consumer.

“Issues arise when Atol retains all of those funds and they do not go to the acquirer who is actually on risk for the chargebacks. That’s where there’s a disconnect.

“We have worked hard with Atol to get a relationship whereby we do get some access to those funds but that’s currently still not the case.”

Paysafe expects many of the merchant acquirers who abandoned the travel sector or demanded additional security during Covid, to have a renewed interest in firms’ business by next March.

But it said merchants, payments firms, industry bodies and regulators must ensure they have a much better understanding of each other and the true risk they are being exposed to.

Chandramani said: “Acquirers are not scared of offering credit or of their exposure to risk, what they are scared of is the unknown. All we are trying to do is ensure we know exactly what the risk is.

“Travel clients are being squeezed by their current acquirer or they have gone through the application process with a new acquirer only to be offered unworkable security terms.

“We will look at you as a business, not just a high-risk travel client, and get to a position using all mechanisms at our disposal from unsecured terms to fully secured and everything in between.

“Having that clear data and understanding of the business gives us the confidence to do that.”

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