Card acquirers are pushing travel businesses towards trust accounts “sooner than the CAA”, according to a leading provider of trust arrangements.
Daniel Landen, managing director of Protected Trust Services, told Travel Weekly: “A lot of businesses will be in the trust environment before the CAA pushes them into it.”
The current CAA consultation on Atol Reform which runs until mid-August suggests segregating payments “may provide comfort to merchant acquirers that they will be less exposed”.
Speaking on a Travel Weekly webcast, Landen argued: “Merchant acquirers don’t like travel. They don’t want to work with bonding. They want a separation of client funds.
“Underwriters are looking at travel saying ‘We don’t want to do that’. Suppliers are saying, ‘If you don’t have a separation of client funds, we need you to pay us as soon as possible’.”
Landen insisted: “A trust account ticks a lot of boxes.
Association of Atol Companies (AAC) legal advisor Alan Bowen agreed there is pressure from merchant acquirers, saying: “In the last 12 months we’ve seen a number of merchant acquirers have a panic attack about the travel industry. There is no question about that.”
But he added: “I had to prepare a list of merchant acquirers for the AAC and I found 17 which were interested in moving into the travel industry as opposed to moving out.”
Landen said: “I don’t know 17, and the ones I do know are asking for huge rolling reserves or cash deposits. You’re better off going to a trust account in that scenario.
“Card acquirers are pushing people towards trust accounts maybe sooner than the CAA.”
The consultation was due to close on July 30 but has been extended to August 15.