Agents and operators face “a perfect storm” of financial pressures, with insolvencies forecast when the government withdraws current aid measures, industry advisors have warned.
Merchant acquirers’ demands for processing card payments are exacerbating the cash pressures of refunds and chargebacks as some customers lose patience with repeated cancellations.
Steve Robinson, global sales and relationships director at financial services firm Coe Solutions, told an Elman Wall Covid-19 webinar: “The headline acquirers we’re having trouble with are getting worse. First Data has made very clear it wants trust [arrangements] or 100% security. They want a cash deposit and [say] the talking is over. That isn’t workable. There are other acquirers doing the same.”
He noted “there are banks that still want to help” but said businesses facing difficulties with merchant acquirers “need to move away as soon as possible”.
Abta head of member services Danny Waine said: “It’s not widespread. It depends who your merchant acquirer is. First Data is being the most difficult. Different companies are more amenable. Get in touch with Abta if you have these issues. We’ve been able to help members move to new merchant facilities.”
Themis Advisory director Jo Kolatsis agreed, saying: “You have a perfect storm. The latest lockdown put a damper on everything and people have begun to question what will happen at Easter and in the summer. We’ve seen people amenable to moving dates, but some have changed maybe four or five times now. People are losing patience.”
She suggested “customers are becoming more aggressive” with chargebacks and warned: “The refund credit note [RCN] validity date will come to an end and people will need to find cash.”
Insolvency practitioner Mark Supperstone, managing partner at Resolve Group, said: “It’s a question of how long things can continue to be put back. Debt is mounting. We expect insolvencies to increase. As government support starts to unwind, companies will be in difficulty.”
Abta head of financial services John de Vial warned Atol and Abta-bonding renewals could be tough following a “painful” September renewals process. He said: “March will be no easier because people will continue to issue RCNs and the CAA is becoming more and more concerned about some licence holders as it becomes clear early summer could be affected.”