Acquirer Trust
Acquirers providing services to the Travel sector are not protected by ATOL, ABTA or other similar consumer protection mechanisms.
Apart from Section 75, when licensed by bodies such as Visa and Mastercard the acquirers have to follow stringent guidelines and meet solvency tests amongst other complex requirements as part of the scheme rules they have to adopt.
Section 75 of the Consumer Credit Act 1974 makes the acquirer (credit card company) jointly and severally liable for any breach of contract by the retailer or trader (“merchant”) Section 75 also applies to foreign transactions as well as goods bought online, by telephone or mail order for delivery to the UK from overseas.
Section 75 applies to all retail activity and is an issue where delivery of the service and or product is in the future. Consumer funds need to be held until delivery of the service and or product has been completed.
Acquirer Trust
In the unfortunate situation where a business (merchant) fails and there are insufficient funds, their acquirer generally ends up having to reimburse consumers for bookings made using credit and debit cards.
The acquirers are at risk in the process of lending money to their merchants. COVID 19 has confirmed how this risk is real and unsecured. Acquirers started to look into deferred payment, rolling reserves, cash bonds, insurance bonds, etc., as a security.
Most merchants would use consumer funds to compensate for the low season sales and as deposits for accommodation and/or flights.
The CAA in this case will not allow the setting up of such a trust where an ATOL arrangement is already in place.
An Acquirer protection Trust model has been developed in association with other acquirer partners to hold these funds with conditions agreed between the merchant and the acquirer.
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