Merchant facilities will strangle independent travel agents

Forget the recession, ATOL reforms, terrorism and online agents undercutting each other, merchant facilities may just be the death of the independent travel agent if we are not careful and action is not taken.

As an ABTA travel agent, you have to have a bond in place to protect your clients in the event that your business fails. The formula to calculate your bond is based on your turnover and what ABTA estimates “they” would be liable for if the business could not meet your liabilities.

For the consumer, this means that wherever they see the ABTA logo, they know their money is secure which gives them confidence in the agent.

This is a simple model which works well for both the consumer and the agent and should mean any businesses that buy or sell to agents as a business partner can also feel safe in the knowledge that adequate checks and monitoring are, and will, be carried out.

So why do merchant facilities providers give agents a tough time? There is an easy answer; the consumer credit act.

Anybody purchasing a holiday with a credit card (and some debits cards) who spends over £100 can claim the money back from the credit card company in the event of any failure.

So, a travel agent goes bust and the majority of the monies have been paid by credit card. What are ABTA going to do? Take the whack? Or pass the buck to the credit card company? We all know what we would do. This is why the merchant companies do not like travel agents; they believe the risks are too high.

When I took on two new branches, my existing provider wanted me to produce a sixty thousand pound bond. This was impossible as it would have affected my cash flow in a major way. I looked at getting an “insurance policy” for the bond, but nobody in the market would even entertain ten thousand, let alone sixty thousand.

So I had to start again with a new provider and justify that I had a good business model. This took a long time and could have potentially stopped us from opening the new branches.

Merchant facilities will become harder to come by over the next twenty four months and will stop businesses moving forward with expansion plans, which is detrimental to the industry and the economy.

So my question is, if I decide to accept credit cards only, can I release my bond with ABTA, as all consumers will be protected by their own credit card companies?