United's credit card policy could foul corporate travel: report
Published: 06 Jul 2009
United Airlines’ new credit card acceptance policy may make “life more difficult for corporate travellers and their travel agents”.
The airline has been in news for its decision to “make some travel agents pay the credit card fees on flights that they book”. The airline told an unspecified number of travel agents that starting July 20, they will no longer be able to access its merchant agreements with credit card companies such as Visa, MasterCard and American Express.
Dayton Business Journal highlighted that an agent using United’s website, bypassing such travel systems as Apollo and Sabre, would not allow companies to capture the discounts they have negotiated with United nor would it allow their travel agent to survey several carriers on a route to find the lowest price. According to the report, United is hoping to shift the cost of accepting credit and debit cards onto selected travel agencies. Those agencies say the airline’s move shifts to them the risk for paying out refunds if the carrier goes bankrupt. While it’s also likely to reduce the amount of money that United has to keep in the bank to guard against charge-backs, it would increase those requirements for the travel agents. That’s a nonstarter for most agencies — and their banks, which would have to honor charge-back requests that could total billions of dollars in the event of an airline bankruptcy.
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Mcdaddy said on 30 Oct 09:
Some points are kinda confusing. It depends sometimes on rates for merchant accounts given.
Pitkin said on 10 Jul 09:
At first glance, this seemed like an extraordinarily dumb move by United Airlines. Revenue is down, so why alienate travel agents who generate a signification chunk or business?
And then I read the last sentence in the news article about having "to honor charge-back requests that could total billions of dollars in the event of an airline bankruptcy." Whoa! Is there a bigger story just over the horizon?