BUSINESS NEWS ystem passed Covid stress test behalf of its merchant clients. Lee Hayhurst reports


“The concept of Atol trusts is great, but operationally there needs to be alignment across the industry”


money and the ability to contest chargebacks. “If by following those rules it


meant we could get money back for our merchant then that’s what we’ll do in order to support them.”


Merchant liquidity The situation remains far from resolved and with so many credit notes still in circulation, travel firms are likely to face further claims from clients who opt to demand their money back. But Stanbridge believes people


have generally got used to this “new normal” and most consumers who want their money have already tried to get it. He adds: “There is still a vast


number of credit notes or vouchers out there which merchants have to at some point fulfil. “The main reason any merchant


didn’t really want to issue a refund was because of the huge liquidity burden that would create. “Where we had our safeguarding


methodology in place, with consumer money kept in a segregated, independently run account, it meant those funds were available during Covid to support refunds. “Merchants who had that


safeguarding mechanism maintained liquidity and were able to issue refunds well in advance of some of their peers.”


travelweekly.co.uk


Atol reform Due to Covid, trust accounts have increasingly come to be seen as an answer to consumer financial protection and, although not considered the perfect solution, the CAA has become an advocate. Its Atol reform consultation,


which ended last month, sought views on the segregation of customer monies from working capital and a more risk-based approach to financial protection. Stanbridge says: “Trusts are


probably the pre-eminent solution. I don’t think bonds have got any future in terms of payments and securitising of consumer risk. “The concept of Atol trusts is great.


But operationally there needs to be further alignment across the industry. “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. “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. “As 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


via the card network it doesn’t negate issues for the acquirer or the card schemes. “There needs to be greater


alignment on how that flow of funds moves into the industry but then back out through the payments systems.”


Daniel Stanbridge: ‘Last year was a live stress test of the safeguarding model. When it came to refunds the funds were there’


9 SEPTEMBER 2021 55


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