EzTIX CEO Jeremy Mitchell responds to Tourpreneur questions over refund delays.
EzTIx are coming under heavy fire from tour operators over the delay in paying out refunds to its customers who cancelled bookings due to COVID-19. Many operators are furious that the company shut down all its social media accounts and accuse the company of not communicating with them.
Tourpreneur is in contact with several operators who have had thousands of dollars withdrawn from their bank accounts by EzTix to cover cancellations but whose customers are still waiting on refunds. (If you have been affected by this and wish to talk publicly about your experience please email [email protected])
Tourpreneur asked EzTix why it is taking so long to refund customers, in some cases, customers are still waiting for refunds for over 4 months. We also asked the Toronto based booking platform, what percentage of its US operators’ customers had been refunded. Here is CEO Jeremy Mitchell’s response in full:
In response to your follow up questions: From Jeremy Mitchell, CEO & Founder, EzTix.
Under our former payment processing model, EzTix took on a considerable amount of risk as every booking processed in behalf of a third party equates to a line of credit being extended to that business. This is because should a business not provide the service they are selling, EzTix is ultimately responsible for the value of that ticket for a period of 6 months after purchase. Tour and event operators were paid out weekly for their sales, not on completed events once they have actually earned the revenue. Prior to the pandemic we saw this as an acceptable level of risk.
When the global shut down hit, we found ourselves with several major factors which, on their own and under normal volumes, would not in themselves cause interruptions in service. However, in a world where all these items have been exacerbated to levels never seen before, together they have created the perfect storm for a payments company.
The first factor being the volume of refunds. On average EzTix processes a few thousand dollars in refunds per day. All merchant processor accounts have daily limits assigned to refunds as they represent a huge liability and risk to the merchant processors. EzTix’s daily limit had been set based on 10 years of history and when it was requested for it to be augmented in order to be able to process a higher volume of refunds our request was denied (due to Covid related risk factors) resulting in about ten years’ worth of refunds needing to be processed with a daily limit equal to about one week’s worth of refunds. You can do the math to understand what that means in terms of timelines we’re fighting against. The unwillingness and challenges that were placed in front of us by the merchant processing partner have resulted in EzTix terminating the commercial relationship with them and instead seeking out and establishing a partnership with the global leader in online payments. (Stripe Payments).
The second factor at play is a massive debt owed to EzTix by tour operators due to refunds they have initiated without the funds to back up those refunds. This is the very reason there are limits on payment processing accounts. There are great players out there in the tour operator industry who responsibly manage their businesses and ensure that they do not spend their revenue before it’s earned (when the tour happens), but unfortunately, a very large portion of our client base had spent their funds and therefore had no ability to repay EzTix for the refunds that must be processed.
Because of the unprecedented volume of refunds, this has created long delays on many accounts as we have been unable to collect from the client. This has also created angry ticket buyers who want their refunds even though the company they booked with doesn’t have the funds to reimburse them. At the end of the day, EzTix is financially responsible for these bookings and as such we must process the refunds regardless of when we collect from the client who irresponsibly spent the funds before operating the experience they sold.
A third factor creating delays and problems at this time relates to a group of former clients, several of whom are the most vocal regarding refunds, whom have breached their EzTix Service Agreement. As a result, their accounts have been frozen until their breach has been settled as EzTix cannot and will not extend credit to any client who is in material breach of their contract. This situation represents more than half the remaining clients who have outstanding refunds at this time. The EzTix risk team is working through these situations one by one but unfortunately with very limited staff this too will take time.
The fourth and final factor that has created major problems for us is again related to refunds being issued. When EzTix refunds a booking, we have always had the policy to refund the associated service fees. This is not an issue under normal circumstances however when we are refunding essentially all sales from a 6-month period coupled with no new sales being processed, we end up in a situation where we have refunded nearly half a year’s revenue.
As two weeks became a month, then two months, the situation only grew worse.
The cost of providing our services largely remain constant. Many businesses during this crisis could lay off most staff and largely cease operations. EzTix, like any reservation technology provider, largely cannot. Servers must continue to run, websites must be hosted, a minimal level of support must be maintained.
Now there is a cash crisis, little revenue, and continued operating costs as the shutdown rages for months.
Like most of the businesses we work with, EzTix is independently owned. We were unprepared for a pandemic because never in our lives have we seen anything like this. Businesses great and small around the world are in exactly the same boat; bills piling up, limited revenue, no end in sight.
The easiest solution would have been to forbid refunds under the force majeur clause in our service agreements. In retrospect, this may have been a better decision, but we have always made operating choices based on what our Partners felt was best for their businesses.
Today, less than 3% of EzTix accounts have guests with outstanding refunds. We are prioritizing refunds to active Partners whose accounts are in good standing. We are working hard to complete every last one.
We have always worked to support our Partners and help them grow. Today, we need the support and we are grateful for those Partners now helping us. Every decision made during this pandemic has been a balance between helping our Partners and ensuring the survival of EzTix. After all, our sector must have strong, healthy, independently owned technology providers.
Finally, we must warn against putting stock in the hearsay found online. None of our financial partners have, or would, give out an accurate picture of our finances or business to anyone over email. That would be a gross violation of our privacy and several laws. The details posted are general answers in nature and do not represent the realities of our situation. They only represent industry standards.
Everyone wants to make sense of this madness and find hope. Everyone in our sector has taken unbelievable financial losses. To expect EzTix to have been immune and continue providing our services without any revenue is unreasonable.
Our new model will protect our Partners and give absolute clarity over the finances related to their accounts. We continue to pursue every avenue to collect on debts owed to us and loss of revenue from operators who have breached their contracts.
Tourism will return. Events will come back. EzTix plans to be there helping businesses grow and create amazing experiences because that’s what we’re passionate about.
Tourpreneur is the world’s only weekly independent podcast focused on activity and tour operators. Available on all good podcast apps. Subscribe here and never miss an episode of the show.
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