Fees ban makes travel a riskier business for credit card firms
The ban on card charges introduced in January 2018 has massively increased credit card companies’ exposure to travel industry failures.
Speaking at the annual Barclays Travel Forum, Barclaycard senior risk manager Pete Cetnik said the ban had led to a change in customer behaviour, with more holidaymakers now choosing to use credit cards to pay for their travel.
Under the consumer protection laws, a credit card company is obliged to refund a customer if they don’t receive goods or services they have paid for, so if a customer has bought a holiday or a flight with a credit card and the airline or holiday company goes bust before their trip, the credit card issuer must refund them.
"The credit card companies have seen a massive increase in this type of exposure because of the increase in credit card bookings," said Cetnik.
It was reported by Sky News last week that credit card acquirers in the Nordic region are seeking to hold on to customers’ payments for Thomas Cook holidays for several weeks following news that the operator had lost almost £1.5 billion over the winter.
In order to take such a drastic step, card companies have to give notice to the company under the terms of their contract, it’s not something they can do overnight, and Cetnik said that in doing so it was very difficult for the credit card firms not to precipitate ‘the very thing you are trying to avoid’.
Linsey McNeill
Editor Linsey McNeill has been writing about travel for more than three decades. Bylines include The Times, Telegraph, Observer, Guardian and Which? plus the South China Morning Post. She also shares insider tips on thetraveljournalist.co.uk
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