Travel Trusts are increasingly favoured over travel bonding as a means of providing the financial protection that the law requires travel companies to have in place. Here are just some of the reasons why:-
They are well liked by merchant services providers
Merchant services suppliers favour the use of trust accounts over travel bonding as they are transparent and greatly reduce the risk to consumer monies, particularly where the supplier is an active part of the trust arrangement. Merchant acquirers don’t recognise travel bonding in the same way as they have less control and influence over the funds realised in the event of the bond holding travel company’s insolvency.
Some merchant service suppliers recognise the reduced risks associated with trust accounts by passing on rate savings to trust account holders.
Alternative arrangements are often expensive
The cost of travel bonding is on the up as are the Regulators’ minimum bond requirements. Travel bonding options are often prohibitive for a start-up or low turnover business.
They don’t require an annual renewal
We aren’t promising that implementing a trust account is fun, but once it’s done, at least it doesn’t have to be revisited again another twelve months later. That’s more time for you to actually run your business.
They provide ease of administration following failure
In a correctly run trust structure, consumers’ money will be securely held in a separate designated account until the arrangements it relates to have been fully performed or until suppliers have been paid and can be transferred to a fulfilment body immediately. So in the event of an account holder’s insolvency, customers will not experience lengthy delays in getting their money, and will not need to jump through administrative hoops to get it.
They are secure
If correctly set up and administered, trust accounts are a more secure and reliable means of providing protection than a financial failure insurance policy or travel bonding.
Insurance policies can be subject to onerous conditions which may mean cover isn’t as reliable as it might appear.
Travel bonding is only as reliable as the assessment of turnover it is to protect. This means that the risk of over trading is constantly present.