The news last week of the failure of the airline Bonza ought to give consumers some pause for thought. It is just the latest example of the risk consumers take who decide to ditch their Mastercard or Visa credit card. Wisely, Amex did not partner with Bonza. Back in November, Australia’s largest PayTo provider, Monoova, was congratulating itself on being selected by Australia’s newest airline Bonza to offer PayTo. If you believed the hype, PayTo offers seamless, fee-free payment for consumers paying online for their flights or travel booking, avoiding the need to use their credit card.

PayTo: is it really suited to travel? Monoova’s unfortunate Nov 2023 comments

With what now seems to be a very unfortunate choice of words, Monoova said: “Bonza was an attractive partner for Monoova given its unique positioning as a market challenger.”

The statement went on: “PayTo is particularly well suited to support the travel industry due to the regularity of high-value transactions. These trigger large merchant fees for airlines and travel agencies, and surcharges for consumers. High-value transactions are also more likely to be charged-back if funded by cards.” The Monoova CEO added: “PayTo will quickly become the preferred payment method for a wide array of online transactions.”

It is of course a nonsense. PayTo was never designed as a suitable payment option for one-off payments in an app. If you accept the principle that consumers need protection, you cannot advance PayTo as a wise call for such transactions.

The counter argument would be that PayTo represents a solution to a problem that does not really exist. I suppose it makes a change from the claims from the BNPL outfits claiming that BNPL will supplant credit cards. In BNPL, the customer agrees to terms and conditions that invalidate any chargeback claim, So, merchants really like BNPL from the position of no chargebacks.

Bonza duly failed. A lot of Australian consumers are out of pocket.  Indeed, Australian press reports that many passengers were stranded. Consumers that paid for their flights using a credit card, can file a chargeback claim. Consumers that used PayTo, are on their own. Unsecured creditors and unlikely to receive much back. And if they ultimately receive anything, they will have a long wait.

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The high-profile failure of Bonza should hammer home a key message to consumers. With direct account-to-account real time payments, there is no intermediary for customers to rely upon if the merchant doesn’t refund or replace the purchase. The merchant acquirer for Bonza now faces anything up to an estimated A$6m in claims from customers who paid for future flights using their credit card. But for PayTo users, forget it.

I mailed Monoova prior to posting to enquire if it had any comments to make regarding its Bonza collaboration-answer came there none.