Travel Merchant Services
The travel industry can find payment processing to be difficult, requiring businesses to use specialized travel merchant account services. Though most businesses in the travel industry are classified as high risk, the team at Allied Payments can approve most merchants. Working with merchants that are anywhere from startup to establish, needing their first account or facing an account termination; our team has a variety of solutions.
Travel businesses make up a significant part of the global economy. In 2019, travel and tourism grew by nearly 4% to almost $9Trillion USD in revenues. But similar to other industries, chargebacks have created a sigma for the travel industry. This has been one of the main reasons travel businesses continue to have problems applying for merchant services. The demand has been satisfied by payment processors who specialize in hospitality and travel merchant account services. Merchants working with Allied Payments are from many different segments of the travel industry. Some of the most common segments of the travel industry include:
- Airfare Merchant Account Services
- Car Rental Merchant Account Services
- Cruise Merchant Account Services
- Hotel Merchant Account Services
- Resort Merchant Account Services
- Sightseeing Merchant Account Services
- Timeshare Merchant Account Services
- Travel Club Merchant Account Services
- Vacation Club Merchant Account Services
Each type of business carries its own challenges and difficulties when it comes to accepting payments. Finding a merchant services provider that specializes in your business type while providing an affordable solution can be a challenge at times. At Allied Payments, our team of payment professionals specializes in all types of travel agent merchant account and tour merchant account services.
What are Merchant Account Services?
Merchant accounts for travel businesses allow for merchants to accept transactions; whether online, over the phone or in person. Payments methods that can be used include credit cards, debit card, ACH/eCheck or gift cards. Depending on the type of travel business, merchants can use a number of different types of equipment for payment acceptance. Businesses with a storefront can use credit card terminals or POS machines while online businesses can use a payment gateway or virtual terminal. At Allied Payments, we will work to place merchants with the best equipment for their businesses' needs.
Every type of travel-related business, regardless if its a hotel, airline car rental agency, or another travel business will be categorized into a Merchant Category Code. These categories, otherwise known as MCC, allow for the financial networks to organize hospitality and travel businesses for better account management. In the travel industry, the most commonly used MCC codes by merchants include:
- 4112 - Passenger Railroads
- 4131 - Bus Lines/Charter/Tour
- 4411 - Steamship/Cruise Lines
- 4511 - Airlines, Air Carriers
- 4582 - Airports/Fields/Terminals
- 4722 - Travel Agencies
- 4789 - Transportation Services
- 5962 - Direct Marketing - Travel Related Arrangements Services
- 7011 - Hotels/Motels/Resorts*
- 7012 - Timeshares
- 7512 - Automobile Rental Agency*
*Most national Rental Car Agencies have a specific MCC in the 3300 or 3400 blocks.
*Most national Hotels and Motels have a specific MCC from the 3500 to 3800 blocks.
Operating a travel business in an MCC other than any of the above should pose a concern to the merchant. Processing transactions using a mismatched MCC code could result in account termination or even being added to the MATCH list. Merchants with concerns about how their business is classified, or want to change their classification can contact Allied Payments. Our team of travel payment processing professionals would be happy to answer any questions.
What are Travel Merchant Account Fees
Costs for a travel merchant account can vary drastically between payment processors and even the merchants themselves. Many different factors can change the fees for each transaction. Businesses with a proven track record of low refunds and chargebacks will almost always have lower cost structures verse startup or existing businesses with high chargebacks. Some of the most common payment processing fees charged to business include:
- Discount Fee
- Transaction Fee
- Merchant Account Monthly Fee
- Payment Gateway Transaction Fee
- Payment Gateway Monthly Fee
- Chargeback Fee (per occurrence)
- Reserve (if required)
- Application Fee (if required)
The discount fee is the percentage taken out by the customer's bank, payment card network and the payment processor. This fee will vary between businesses and payment processors based on the risk of the business. Shopping around will give merchants the ability to find a payment processor able to accept their business with the best terms.
Transaction fees are another cost associated with transactions. Depending on the number of sales or refunds processed, the total monthly fee for transactions can vary drastically. Higher volume merchants are going to want to negotiate these fees lower more than merchants with lower-volume businesses. Payment authorizations, batches, and refunds are viewed as transactions and assessed the agreed-upon fee.
Merchant accounts will almost always have a monthly fee billed to the merchant. Most payment processors will have a standard fee while some other merchant services companies will waive this fee. Payment processors that waive this fee will generally recoup the lost revenue through higher discount or transaction fees.
Similar to the merchant account, the payment gateway will also have additional fees. In some cases, the payment processor will wrap the merchant account and gateway together. Most payment gateways will charge merchants a monthly fee and a transaction fee. Unlike the merchant account, payment gateway fees are usually set in stone and merchants are unable to negotiate these fees.
Other fees, such as the chargebacks and refunds are billed to merchants on a case by case basis. In some instances, when a merchant is applying for a travel merchant account, they might be required to pay an application fee or approval is contingent on paying a reserve. Many times these fees can be negotiated or removed at a future date.
What are Chargebacks in the Travel Industry
The largest concern of financial institutions, including payment processors and acquiring banks, in the travel industry is the threat of chargebacks. Most purchases made by customers are over $100 with a large portion of transactions being over $1000. Travel agents and tour companies are generally making arrangements months in advance, incurring multiple costs that are many times non-refundable on their end.
Customer transactions are almost always made months in advance; whether it's for a tour, airfare, cruise ship, transportation or other excursions. Operators generally have strict guidelines for any type of cancellation, resulting in high chargeback levels. Many travel and tour operators will offer varying levels of insurance or refunds. Unfortunately, customers do not always abide by these terms or plan well enough in advance to be prepared unforeseen changes.
Another issue for the travel industry stems from the businesses themselves. Many travel agencies and tour companies end up closing their operations between taking payment and providing the service. Their inability to refund these payments leads to customers filing chargebacks. This has been one of the reasons why travel merchant account services have become more difficult to find.
While this is not the case with most businesses, it has happened enough to create problems for travel operators. Established companies with a clean track record generally will not have problems finding affordable merchant services. Startup travel businesses will usually need to partner with a high risk provider until they have history.
Finding the best Travel Merchant Account Provider
Businesses in the travel and tour industry should spend time researching and questioning potential merchant services companies. Partnering with a merchant services provider that is not equipped to handle tour and travel payments can become an expensive decision in the future.
Firsthand confirmation by the merchant that the payment processor and/or bank readily accepts tour operators and travel agents is an essential step. As obvious of a question, many merchants contract with a payment services provider only to find out that they are a prohibited business type. This type of problem can lead to canceled transactions and losses by the businesses due to costs they incur at the time of booking.
One of the largest concerns for merchants are the chargebacks from customers. The travel industry has an ominous history of problems with customer payments. The benefit of having a travel merchant account lies in the fact that banks and payment processors are familiar with business operations. Payment processors specializing in merchant accounts for the travel industry are also prepared to handle higher percentages of chargebacks. While businesses need to remain within acceptable tolerance levels, many banks and processors understand the problems facing the industry and are able to work with these merchants.
Payment processors in the travel industry are experienced in understanding what is needed to improve business operations. One of the most important steps is to endure that the business is properly stating the terms and conditions of their business. Requiring customers to accept the terms and conditions along while listing their refund policy will during disputes. The companies comprising of the bankcard networks, along with the customer's bank, will want to know that the consumer was properly notified of the terms prior to purchase.
Start processing Travel payments today!
Even though credit card processing for travel agencies and other businesses in the travel industry is high risk, it's still possible. Merchants will have to demonstrate a reasonable level of risk to establish merchant services. At Allied Payments, we can help businesses operating in a responsible manner without excessive costs or fees.
- No application fees
- Competitive Rates and Fees
- Payment Gateway with easy shopping cart integration
- Virtual Terminal available
With minimal documents and a simple application, most merchants can be approved in as little as 24 hours. Contact our travel credit card processing professionals for more information or to start the application process to set up your travel merchant account today!