The final few months of 2025 were difficult for acquirers. The failure of FlyPlay left them carrying multi-million-pound exposure. Then, in January 2026, three travel failures occurred in a single week, including Gold Crest Holidays, which has been trading for over 30 years.
In a recent Travel Weekly piece, Sami Doyle, CEO of TMU Management, argued, "The detail is not the individual failures, but the pattern they reinforce." He explained that, even where protection is in place, insolvency outcomes are still finding their way into the payments system because chargebacks are being treated as a backstop insolvency protection, and this is a role they were never meant to play.
When the travel industry leans on chargebacks to absorb merchant failures, risk drifts away from where it was meant to sit. The consequences are far-reaching—the costs of this backstop insolvency protection are passed on to every travel business in the sector in the form of tighter terms, higher reserves and restricted access to the card processing services they depend on.
In this article, we explore how chargebacks ended up in this position, why it isn't sustainable and what proper protection looks like.
Chargebacks exist to protect cardholders—they cover fraud, unauthorised transactions and non-delivery of goods and services. The system gives consumers a clear route to fund recovery if something goes wrong, which helps maintain trust in card payments.
It's worth remembering what world these rules were written for. When chargeback protection was first established, commerce looked very different. Transactions happened face-to-face, goods were physical and delivered immediately, and acquirers often knew the merchants they worked with personally. Modern travel commerce is the complete opposite of that—digital, distributed, and services are paid for months or even years in advance.
The important point here is what chargebacks do with losses. Someone has to pay, which means they're not eliminated, but relocated. When the merchant is solvent, the merchant pays for the cost of the chargeback, and when the merchant is insolvent, the acquirer pays.
That distinction matters because acquirers were never meant to underwrite insolvency risk like this. They didn't agree to act as the financial protection of last resort—they process payments and take a defined commercial risk in doing so. Yet that's increasingly the role they're being asked to fill when travel businesses become insolvent.
Travel combines several characteristics that turn chargeback exposure into a particularly concentrated risk compared to many other sectors:
The Thomas Cook collapse in 2019 is the textbook example of how chargebacks are now used as proxy insolvency protection. More than 150,000 customers needed repatriating, and chargeback exposure across the acquirer ecosystem ran into the hundreds of millions. The pattern has continued since then, and the recent run of failures has reinforced the need for change.
The unfortunate Gold Crest Holidays collapse in January 2026 is a more recent example that shows we haven't tackled the problem yet. In the communications that followed the company's collapse, customers who had paid by credit card were directed to seek refunds from their card issuer, and customers who paid by other means were guided through the regulatory financial protection process.
That distinction tells a bigger story. Under the Package Travel Regulations, a travel company's failure should be met by its designated form of financial protection: bonding, a trust-based model or insurance. Card issuers and acquirers shouldn't be the first port of call for a refund. But they increasingly are, because routing customers to chargebacks is faster, simpler and easier to communicate than the regulatory protection process.
This is how chargebacks have become proxy insolvency protection. It hasn't happened by design, but because each individual failure makes the chargeback route the path of least resistance, and the industry has allowed that pattern to normalise. But the position isn't sustainable, and the consequences are starting to show.
When acquirers absorb insolvency losses they were never meant to carry in the first place, they react in ways that affect every travel business in the sector:
Travel is a low-margin industry operating in a price-sensitive consumer environment, and small increases in cost have a big impact. There's not much room to absorb higher merchant fees internally, and there's also limited scope to pass them on without damaging the business's competitiveness.
This isn't theoretical, either. During the pandemic, payment capacity for travel contracted sharply as acquirers reassessed risk exposure, reduced limits and, in some cases, left the sector altogether.
The same dynamic is starting to reappear, driven by a different cause but with the same underlying thinking. Acquirers are having to protect themselves from exposure they were never meant to carry, and the cost of that lands on travel businesses, including those who did nothing wrong.
We believe that insolvency needs to be handled where it was meant to sit, through proper financial protection at the operator level. Chargebacks become what they were always intended to be—a consumer protection mechanism for individual disputes.
For travel businesses, that means layered financial protection in the form of:
A travel business with layered protection in place meets its regulatory obligations under the Package Travel Regulations and ensures that, if something does go wrong, the failure is contained to where it should be.
Robust protection isn't just about protecting a travel business's interests (although that is important), because there's also the wider industry ecosystem to consider. When operations have strong protection in place, acquirers can price travel risk accurately, and the sector maintains access to competitive payment services, giving businesses the stability they need to keep growing.
Chargebacks are a downstream consequence of failure, not an upstream strategy for managing it. When the industry treats them as a proxy for insolvency cover, risk ends up drifting to parties who were never meant to carry it, and the costs eventually find their way back to every travel business in the sector.
The recent cluster of failures hasn't broken the system. What it has done is expose just how thin the margin for error has become for the travel sector. Acquirers can only absorb so much before they have to take desperate measures, including repricing, restriction or even withdrawal, and the industry has seen this play out before during the pandemic.
Insolvency risk needs to return to where it belongs: through proper protection on the merchant side. That's what we do at TMU Management. We specialise in insurance and financial risk strategy for travel businesses, designing layered protection that accurately reflects how businesses operate.
Travel businesses come to us for many reasons, including:
The sooner exposure is mapped, the sooner it can be addressed. That's what we're here for. Contact the TMU Management team to find out how layered financial protection protects you and the wider travel ecosystem.
If you need insurance that reflects how your business really works, TMU Management is here to help. Our team will assess your challenges, understand your exposures and design a bespoke solution that fits your strategy.
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