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Response to The Insolvency Service consultation on supply of essential services to insolvent businesses

October 2014

All of our merchant acquiring members are fully committed to helping those business customers facing trading difficulty and potential insolvency with appropriate support during the insolvency process and to work closely with the insolvency office-holder to provide the means to continue to accept card payments. This is usually essential to a viable business recovery plan. However, it is important for the Insolvency Service to understand how the role that card acquirers play in facilitating businesses accepting card payments differs quite fundamentally from a typical utility supplier, in that the acquirer is exposed to a significantly higher degree of risk because of their obligations to underwrite the risk of breach of contract, or failure to supply goods and services to the cardholder.

This differentiates merchant acquiring (the provision of card acceptance facilities) from the other “supplies” being considered within the context of the consultation. We believe that the inclusion of payment acquisition services within the scope of sections 233 and 372 will have a number of unintended consequences, restricting access to these services from high risk merchant sectors, or the termination of payment acceptance facilities at a much earlier stage, prior to the appointment of an insolvency practitioner. This would ultimately be counter-productive to the objectives of providing the insolvent business with the best chance of survival.

To read the full consultation response, click on the link below.

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