Travel agency refund policy: who pays back what when a trip is cancelled

A travel agency refund policy says what a traveler gets back, from whom and how fast when a trip is cancelled. The refund usually comes from whoever charged the card, the merchant of record. Supplier terms set how much comes back. Your policy should match those terms, say whether your own fee is refundable, and be accepted before the traveler pays.

The supplier sets the penalty. You set the promise. Here is how refunds flow by booking type, what happens to your fee and commission, what EU, UK and state law add, and a workflow, worked example and template to adapt.

What is a travel agency refund policy?

It is the part of your client terms that covers cancellations and money back. It answers three questions: what is refundable, who pays it, and when.

It matters for disputes. Under Visa's rules, cancellation terms must be disclosed before purchase to be relied upon. A policy the traveler never saw doesn't protect you. See travel agency chargebacks for the full dispute process.

This is general information, not legal advice.

Who refunds the traveler: the agency or the supplier?

Whoever is the merchant of record, the business that charged the traveler's card. For air, US Department of Transportation (DOT) rules define it as the business processing the payment, as shown on the consumer's card statement. Visa says a travel agency is often the merchant of record.

Two common setups:

• The supplier charges the card. The cruise line, hotel or tour operator refunds the traveler under its own terms. You help with the request.
• Your agency charges the card. You owe the refund to the traveler, then recover the money from the supplier.

For more on who charges the card, see how travel agencies collect payments.

Watch the gap between the two. Carnival's ticket contract says any refund made by Carnival to an agent on behalf of Guest shall be deemed payment to Guest, whether or not the agent passes it on. Once a supplier pays you, the traveler's refund is your job.

How do refunds work by booking type?

Each supplier type follows different rules. These examples come from the suppliers' own published terms, as checked in October 2026.

Air: the DOT refund rule

A traveler is owed a full refund when a flight is cancelled or significantly changed and they decline the alternative. A significant change includes leaving 3 or more hours earlier, or arriving 3 or more hours later, on a domestic trip (6 hours internationally), a different airport, more connections, or a downgrade.

If you are the merchant of record, the refund is yours to make. A ticket agent must refund within 7 business days of hearing from the airline for credit card purchases. For cash, check, debit card and other payments, the limit is 20 calendar days from when the refund becomes due. It goes back in the original form of payment. The airline must tell you without delay whether the traveler qualifies, and transfer the funds if it holds them.

You can offer a travel credit instead, but you must first inform consumers that they are entitled to a refund. That credit must stay valid for at least 5 years. More on air in how to sell flights without an IATA code.

Hotels: the rate decides

A prepaid rate is usually final. Accor grants no refund on a prepaid reservation. A flexible rate is free to cancel until the hotel's cutoff. After that, a no-show on a cancellable Accor booking costs the first night, including tax. See free cancellation and auto-cancel for deadlines.

Cruises and tours: penalties by days out

Penalties grow as departure nears, usually from the final payment date. Carnival refunds prepaid government taxes and fees after deducting any cancellation charges. Globus charges 50% of the total price from the final payment date to 30 days out, 80% from 29 to 1 days, and 100% on the day of departure. Its deposits are always non-refundable. Full schedules are in deposit and final payment schedules.

When the supplier cancels, the remedy varies. If Globus cancels for reasons other than force majeure and you decline its rebooking offer, it refunds the amounts paid by you for the reservation. After a force majeure cancellation it may offer a future travel credit instead. Carnival's clause covers voyages it cancels or shortens at embarkation or during the cruise. For any reason other than a mechanical failure, the traveler gets a Future Cruise Credit or an Onboard Credit, not cash. Read the clause before you promise cash.

Packages: one price, many refund rules

When you sell several components at one price, each supplier still refunds under its own terms. What this means for agencies: your policy should say the traveler gets back what the suppliers refund, minus any fee you disclosed. Don't promise a full refund the suppliers won't fund.

What do EU and UK package travel rules require?

If you sell packages to travelers in the EU or UK, the law adds refund rights on top of your terms. The EU Package Travel Directive puts these duties on the organiser, the trader that combines and sells or offers for sale packages. A retailer only sells packages an organiser put together.

• The traveler cancels. They may terminate the package travel contract at any time before the start of the package and can be charged an appropriate and justifiable termination fee. The contract can set reasonable standard fees based on how close to departure the cancellation comes.
• Unavoidable and extraordinary circumstances. These must hit the destination and significantly affect the package or the journey there. Then the traveler can cancel with a full refund of any payments made for the package, but no extra compensation.
• The organiser cancels. It can, with a full refund, when too few people enrolled. For trips of more than six days, notice must come no later than 20 days before the start; seven days for two to six days, and 48 hours for shorter trips.
• The deadline. Refunds are due without undue delay and in any event not later than 14 days after the package travel contract is terminated (Article 12(4)).

The UK's Package Travel and Linked Travel Arrangements Regulations 2018 copy these rules in regulations 12, 13 and 14, including the 14-day deadline.

What this means for agencies: "we refund what suppliers refund to us" doesn't work when you organise an EU or UK package. The 14-day clock runs from termination, not from the day a supplier pays you.

What happens to your agency's fee?

For air, DOT decides. A ticket agent may keep its service fee only to the extent that service is for more than processing payment for a flight that the consumer found. The fee must be per passenger, and its existence, amount, and the non-refundable nature if that is the case must be clearly and prominently disclosed when the traveler buys the ticket.

For lodging, the Federal Trade Commission (FTC) bars misrepresenting the nature, purpose, amount, or refundability of any fee. Outside those two, your written terms decide. Set fees up in travel agent service fees.

Do you lose your commission when a booking is refunded?

Usually, on the part that gets refunded. Each supplier's agent terms decide the details.

Air. Delta says that per industry standard, when a travel agency ticket is refunded, the related commission amount is recalled. On a partial refund it recalculates the commission and collects the refunded share by debit memo. It doesn't recall commission after an involuntary reroute to another carrier or ground transport, or after a cancellation for maintenance.

Hotels. Hilton calculates commission based on the hotels' daily checkout records, so a cancelled stay earns none. Its settlement files include non-commissionable records, no-shows and cancellations. Reconcile them against your booking files.

Cruises and tours. Lines set their own rules. Riviera River Cruises changed its policy in September 2024. Travel Market Report quoted it saying advisors will no longer lose their commission when a client cancels in the days before their cruise starts. Clients cancelling within 15 days still lost 100% of the booking cost. Check each line's terms before you count on commission from a cancellation penalty.

What this means for agencies: hold advisor splits until travel is complete, or say in your advisor agreement how you recover a split on a recalled commission. More in commission split models and unpaid commission recovery.

What do state seller-of-travel laws say about refunds?

California and Washington set their own refund deadlines. This is a summary, not legal advice.

California. Before you take payment, you must give the traveler, in writing, all terms and conditions of the travel, including cancellation conditions (§ 17550.13(a)(1)(D)). You must also state that if they're not at fault, sums paid for services not provided will be promptly paid to the passenger. Any day the traveler's money isn't in the required trust account counts as a day you are unable to provide the travel, which starts the 3-day clock.

Washington. When you charged the traveler's card and paid a vendor, card refunds must be applied for within ten days from the date of cancellation. Your written statement at payment must include a penalty advisory: either the amounts, or Cancellation and change penalties apply to these arrangements. Details will be provided upon request.

Trust account rules decide where refund money sits until then: see travel agency trust accounts.

How fast does the traveler get the money?

Two clocks run: yours and the bank's.

Reg Z only starts its clock once you accept a return or forgive a debt for services. It does not require refunds for returns in the first place: your terms and the supplier's decide that.

A refund is not free. On Stripe, a refund might incur a fee, and the original processing fees aren't returned. Cancelling an uncaptured payment costs nothing. That is the case for holding before you charge: see authorization holds.

What if the traveler disputes the charge instead?

Then the bank decides, not your policy. Under Regulation Z, a billing error includes services not delivered "as agreed", and the cardholder must notify the card issuer within 60 days of the first statement showing it.

Slow refunds push travelers to call their bank. Once a chargeback is filed, don't refund separately. ARC warns it could credit the traveler twice.

How to handle a refund request, step by step

Practical guidance, built on the rules above.

1. Log the request in writing. Record the date and time. It sets which supplier penalty tier applies.
2. Check for a chargeback. If the traveler already disputed the charge, answer the dispute and don't refund separately.
3. Find the merchant of record for each part. Check who charged the card.
4. Pull each supplier's terms as booked. Work out each penalty, plus taxes and fees that come back, like Carnival's prepaid taxes.
5. Check the legal floors. DOT for flights, EU or UK package rules, and California or Washington deadlines where they apply.
6. Request supplier refunds and note the dates. In Washington, the 10-day card refund window starts at cancellation.
7. Send the traveler a written breakdown. Show what they paid, each supplier penalty, your fee and the net refund.
8. Refund to the original form of payment within the earliest deadline that applies to you.
9. Adjust commission and advisor splits. Expect recalls on refunded amounts.

Worked example: a partial refund with a non-refundable fee

Illustrative numbers. The penalty tier is Intrepid's published one; the price and fee are made up.

A traveler books an Intrepid tour through you for $4,000. They also pay your planning fee of $200, disclosed as non-refundable. Total paid: $4,200. They cancel 40 days before departure, when Intrepid charges 30% from 31 to 55 days.

Two costs land on you. If you charged the card, the original processing fees aren't returned when you refund. And commission tied to the refunded $2,800 may be recalled, as under Delta's rule above. Whether the operator pays commission on the $1,200 it keeps depends on its agent terms.

Had the traveler cancelled 10 days out, the charge would be 100% and the tour refund $0. If Intrepid charged the card itself, it refunds the $2,800 directly, and you keep the $200 you charged separately.

Travel agency refund policy template

Template: adapt with counsel. This sample is original Tripdash text, not a legal form. Edit the brackets, match your supplier contracts and state rules, and have a lawyer review it.

1. Who you are paying. [Agency name] collects payment for [the services listed on your invoice]. Where a supplier charges your card directly, that supplier's terms govern its refund.
2. Supplier terms apply. Each airline, hotel, cruise line and tour operator sets its own cancellation charges. We give you those terms before you pay, and refunds follow them.
3. If you cancel. We refund what the suppliers refund to us, minus the fees in section 5. Supplier deposits marked non-refundable are not returned.
4. If a supplier cancels or significantly changes your trip. We request your refund or credit from the supplier and pass on what it pays. For flights we sell as merchant of record, you are entitled to a refund under US DOT rules, and we will tell you before offering any credit.
5. Our fees. Our planning fee of [amount] is [non-refundable / refundable until date]. Our airline service fee is [amount] per passenger and is [non-refundable].
6. How and when. Refunds go back to the original form of payment. We send card refunds within [7] business days of receiving supplier funds or confirmation.
7. How to cancel. Send cancellations in writing to [email]. The time we receive it sets which supplier charges apply.
8. Travel insurance. We recommend [insurance]. Its claims are handled by the insurer, not by us.
9. State notices. [If you sell to travelers in California or Washington, add the refund and cancellation-penalty statements those laws require.]
10. Packages for EU or UK travelers. [If you organise the package, refunds owed under package travel law are paid within 14 days of termination.]

How Tripdash Pay handles refunds and payments

Tripdash Pay supports authorization holds, ACH, SEPA instant, SWIFT and local-account netting. Payment tracing follows each payment to the exact supplier that received the funds, so you know where a refund has to come from. See how Tripdash Pay works.

Sources

1. US DOT. 14 CFR Part 260, Refunds for airline fare and ancillary service fees, eCFR text as of October 19, 2026.
2. US DOT. 14 CFR 399.80, Unfair and deceptive practices of ticket agents, eCFR text as of October 19, 2026.
3. Federal Trade Commission. 16 CFR Part 464, Rule on Unfair or Deceptive Fees, eCFR text as of October 19, 2026.
4. Consumer Financial Protection Bureau. Regulation Z, 12 CFR 1026.13: Billing error resolution.
5. Consumer Financial Protection Bureau. Regulation Z, 12 CFR 1026.12(e): Prompt notification of returns and crediting of refunds, eCFR text as of October 19, 2026.
6. Visa. Visa Dispute Management Guide for Merchants, October 2026.
7. Airlines Reporting Corporation (ARC). ARC's Guide to Travel Agency Payment Card Acceptance, Risk Mitigation and Chargeback Management.
8. Stripe. Refund and cancel payments.
9. Carnival Cruise Line. Terms and conditions of ticket contract, as checked October 2026.
10. Globus. Travel terms and conditions, revision of September 8, 2026.
11. Intrepid Travel. Standard booking conditions, as checked October 2026.
12. Hilton. Honors Discount Advance Purchase, as checked October 2026.
13. Accor. General terms and conditions of services, last updated July 2026.
14. European Parliament and Council. Directive (EU) 2015/2302 on package travel and linked travel arrangements, Articles 3 and 12, official text read via the EU Publications Office, October 2026.
15. UK legislation. The Package Travel and Linked Travel Arrangements Regulations 2018, regulations 12, 13 and 14, as checked October 2026.
16. California Attorney General. Seller of Travel laws, Bus. & Prof. Code §§ 17550–17550.59, §§ 17550.13 and 17550.14, accessed October 2026.
17. Washington State Legislature. RCW 19.138.040, Disclosures and RCW 19.138.050, Cancellation, refund, accessed October 2026.
18. Delta Air Lines. Delta Professional: Commissions, Commission Recall Policy, as checked October 2026.
19. Hilton. Centralized Commission Processing: Quick Reference for Travel Agents in the Americas, updated August 2026.
20. Travel Market Report. Riviera River Cruises to Protect Advisor Commissions on Late Cancellations, September 5, 2024.