Leading trade bodies dispute the CAA’s view that segregating customer payments could ease the financial demands of merchant acquirers on tour operators and agents.
The acquirers, which process card payments, have imposed increasing costs on travel firms and some have withdrawn from the sector, viewing it as too high-risk following the collapse of Thomas Cook and onset of Covid. The CAA wants segregated customer payments, most likely in trust accounts, to become a condition of Atol licensing not just for Atol holders but for agents selling their holidays.
In the Atol Reform consultation, which recently closed, the CAA argued: “The existence of segregated monies may provide comfort to merchant acquirers that they will be less exposed to insolvency risk and may make reduced or zero demand for security.”
However, the Association of Atol Companies (AAC) challenged that view in its response, suggesting pressure from acquirers had eased. It noted: “We asked members if they had any problems with their own card acquirer demanding a bond, limiting payments or imposing other onerous terms in the last 18 months: 90% of those responding replied they had not.”
The issue according to the AAC is that the CAA routinely refers Atol protected consumers seeking refunds to the card companies, and thus the acquirers, when an Atol holder fails. That is because refunds are due on credit cards under the Consumer Credit Act and may also be paid on debit cards under voluntary Visa and Mastercard rules.
Relying on the card companies to make refunds reduces the impact of failures on the Air Travel Trust, which underwrites Atol protection, but forces up the cost of card processing as the acquirers cover their losses and protect against future failures.
The AAC argued: “We do not want to see more claims automatically passed to card issuers . . . as further levels of claims will only increase costs to existing Atol holders.”
AAC legal advisor Alan Bowen pointed out that when Atol holders were routinely required to provide bonds there was general agreement “that if the bond was sufficient, the CAA would pay out [on claims]”.
That fell away when the CAA replaced bonding with the Atol Protection Contribution on bookings in 2008, retaining bonds only for new businesses and those deemed at greaterthan- average financial risk.
Advantage Travel Partnership operations director Paul Nunn also questioned the CAA view, telling Travel Weekly: “Protection that reduces reliance on merchant acquirers to pay for failures would help, but it needs clarity around who is liable and who pays [for failures].
“We need to bring merchant acquirers along with us to ensure we see the benefit in reduced fees. We hope a future consultation will take account of stakeholders such as merchant acquirers.”