Voice of the Industry

Understanding credit risk: why deferred-delivery merchants face unique challenges

Monday 2 June 2025 11:25 CET | Editor: Irina Ionescu | Voice of the industry

Thomas Helldorff, VP of Airlines, Travel & Hospitality at Worldpay, discusses the challenges faced by deferred-delivery merchants — such as airlines, travel agencies, event ticketing platforms, and custom manufacturers — who are subject to heightened credit risk scrutiny from payment processors due to delayed service fulfilment.


This article explores how these businesses can mitigate risk through strategic safeguards, diversified operations, and collaborative risk management to secure better payment terms and improve cash flow.

Many deferred-delivery merchants, such as travel, event ticketing, and custom manufacturing businesses, find themselves subject to enhanced credit risk requirements by payment processors, often facing additional financial safeguards, stringent settlement terms, and complex approval processes.  Using airlines as an example, we dive into how deferred-delivery merchants can navigate these challenges more effectively.


The deferred-delivery dilemma

The core issue stems from airlines' unique business model; unlike traditional retail where goods transfer immediately upon payment, airlines collect funds for services delivered weeks or months later. This gap between payment and fulfilment creates substantial credit exposure for acquirers, who become liable for chargebacks if an airline cannot operate paid-for flights due to operational or financial difficulties.

When passengers purchase tickets, they're essentially providing airlines with advance funding for future services. While this creates favourable cashflow dynamics for carriers, it simultaneously requires acquirers to implement additional safeguards to guarantee refunds if services aren't delivered as promised.

Beyond financial metrics: the comprehensive assessment framework

Acquirers evaluate airlines through sophisticated risk frameworks that extend far beyond basic financial statements. For example, route diversification plays a critical role. Airlines operating limited networks between few countries face heightened scrutiny due to market dependency risks, while carriers with balanced networks supported by diverse partnerships typically secure more favourable terms.

Ownership structure is another factor that can significantly influence risk assessment. Government-backed carriers or those owned by stable conglomerates often benefit from improved risk profiles, as acquirers consider the creditworthiness and stability of parent entities when determining exposure levels.

Strategic credit protection tools

Rather than simply accepting unfavourable terms, airlines can work with processors to implement tailored credit protection strategies. These range from traditional cash deposits to delayed settlement arrangements, where funds are held until flights are completed to balance acquirer protection with airline cash flow needs.

Technology solutions like Actuary's risk monitoring platform represent a significant advancement, allowing real-time comparison of payment, refund, and chargeback data against actual flight operations. This data-driven approach enables more precise credit assessment and potentially more favourable terms for well-performing carriers.

The path forward: collaborative risk, management

The most successful airline-processor relationships emerge from collaborative approaches that acknowledge the legitimate concerns of both parties. Regular review cycles allow terms to evolve with changing business conditions, improved financial metrics, or significant volume growth.

Airlines that proactively address risk factors — through transparent financial reporting, diversified operations, and appropriate security measures — position themselves for more favourable payment processing relationships. Understanding the acquirer's perspective enables more effective negotiations and helps airlines prepare for various economic scenarios that might affect their risk classification.

As the industry continues evolving, airlines that master these payment dynamics will secure competitive advantages through improved cash flow management and reduced processing costs.

For a detailed overview of airline payment risk factors and mitigation strategies, read the full article on Worldpay's insights page: Understanding airline payments risk.

About Thomas Helldorff

With 25 years in payments and aviation, Thomas Helldorff previously held leadership roles at Datacash and SITA, where he developed a central payment platform for air transport. He authored the Airline Payments Handbook and holds a master’s in international economics from the University of Innsbruck, including a year at the University of Hong Kong. Thomas is also a frequent speaker at industry events and contributes to thought leadership in airline commerce and payments.

 


About Worldpay

Worldpay’s vision is to unleash the potential of every business. We do this through our ability to power global commerce by providing payments technology and expertise to our clients everywhere. Our processing solutions allow businesses of all sizes to take, make, and manage payments in-person and online worldwide. Annually, we process over 50 billion transactions worth more than USD 2.3 trillion across 146 countries and in 135 currencies.


Free Headlines in your E-mail

Every day we send out a free e-mail with the most important headlines of the last 24 hours.

Subscribe now

Keywords: online payments, payments , chargebacks, risk management, cash, partnership, deferred payments, travel payments, travelling platform, payment processing, payment processor, Acquirer, cash flow
Categories: Payments & Commerce
Companies: Worldpay
Countries: World
This article is part of category

Payments & Commerce

Worldpay

|
Discover all the Company news on Worldpay and other articles related to Worldpay in The Paypers News, Reports, and insights on the payments and fintech industry: