Credit card chargebacks may now pose the biggest risk to agents struggling to meet consumer demands for refunds.

Companies following Abta guidance to issue refund credit notes in place of cash refunds to avoid going bust may simply find frustrated consumers reclaim payments on credit cards which card-issuing banks refund and then charge back to the travel firm.


MoreCoronavirus: The law relating to agents

European Commission poised to update refunds guidance

Government delay threatens ‘mass failures’


A senior industry source said: “Chargebacks are the great danger. That is why it’s essential to get refund credit notes on a legal footing. It’s not disastrous yet, but chargebacks are coming through and will get a whole lot worse. It will cause a real cash crisis.”

Abta is speaking to financial services association UK Finance on chargeback guidance to card issuers and contacting banks taking an aggressive stance.

A source confirmed: “Abta has made its views on behalf of members very clear to UK Finance, and has spoken direct to large card issuers like Barclays.”

Travel Weekly was awaiting a UK Finance statement on its guidance at the time of writing.

The pressure is exacerbated by airlines issuing vouchers in place of refunds for cancelled flights, with Iata confirming vouchers would be issued via its Billing and Settlement Plan last week.

However, card giants Visa and Mastercard offered some comfort with guidance to card issuers “to have cardholders attempt to resolve disputes before processing a chargeback”.


MoreLatest coronavirus news and updates

Travel Weekly coronavirus resource centre


Mastercard gave notice it supports “merchants offering ‘reasonable alternatives’ [to refunds] . . . to reduce chargebacks”.

Visa likewise noted: “Merchants can offer a credit or voucher for future use if that is acceptable to the cardholder.”

However, government action is required to forestall chargebacks fully. Mastercard noted: “Reasonable alternatives cannot be imposed on the cardholder in lieu of a refund. [But] the cardholder may need to accept a voucher in lieu of a refund if a government issues legislation or regulations that enables a merchant to provide a voucher.”