After 37 years in the business, Toronto tour operator Conquest Vacations is closed for business citing, among other things, “unrealistic and unreasonable demands by the credit card processing companies”.

When you make a purchase with a credit card, Visa and Mastercard gaurantee that the product will be delivered.  If the product is not delivered, the issuing bank (like Capital One) can go to the acquiring bank (like Wells Fargo) to get the customers’ money back.  The acquiring bank can collect from the credit card processor, and the credit card processor can collect from the merchant.

As a result, the credit card processor bears significant risk if the merchant goes out of business and isn’t able to deliver the product.  Particularly in travel, where a vacation might be booked months in advance, the amount of risk to the processor can be large.

When the processor gets too worried about that risk, it stops accepting payments for that merchant.  If a business cannot accept payment from customers it quickly goes out of business.

ATA Airlines went bankrupt and left its credit card processor to foot the bill.