Executive summary

This whitepaper will help you if you are:

• Airlines

• Travel agents (including “bricks and mortar” agents, online travel agents, and travel management companies)

• Tour operators

• Coach and bus operators


• Cruise lines

This whitepaper explains:

The problem — Holdbacks and other collateral can severely impact travel companies’ liquidity

• Travel is an ultra-high-risk sector for card acquirers because most payments are for future delivery. If merchants fail to fulfill a service for which they have taken payment (often months in advance) customers can recover their money from the acquirer by initiating the chargeback.

• Acquirers traditionally demand substantial cash collateral (holdbacks) or other financial security from travel merchants to mitigate this risk.

• Holdbacks lock away substantial funds for travel companies and can therefore be highly damaging to liquidity.

• High-profile collapses and the COVID-19 crisis have driven acquirers to impose even harsher terms or quit the travel sector completely.

The Solution — Safeguarding allows liquidity to flow again

• A modern safeguarding arrangement between an acquirer and merchant (created via a trust mechanism) using sophisticated data analysis, is based much more precisely on what has actually been booked and paid, how far in advance of travel, etc.

• Better visibility means the acquirer can typically withhold fewer funds as security from the merchant, and release those funds back to the merchant faster.

• Unlike traditional holdback: – there is a clear schedule for releasing funds back to the merchant. – funds held in trust can be counted as restricted cash on the merchant’s balance sheet.