What is a Travel Merchant Account?

travel credit card processingMerchant accounts for travel bussinesses allow merchants to accept transactions, whether online, over the phone, or in person. Payment methods that can be used include credit cards, debit cards, 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 travel merchants with the best equipment and solutions for their merchant accounts.

Every type of travel industry business, whether a hotel, airline car rental agency, or another travel business, will have their merchant accounts categorized by a Merchant Category Code. These categories, known as MCC, allow financial networks to organize for better account management in the travel payment industry.

Commonly used MCC codes by Travel Merchant Accounts

  • 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 merchant accounts are 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.

Travel Credit Card Processing for Travel Agencies

merchant account for travel agenciesTravel 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 stigma for online travel industry merchant accounts. This has been one of the main reasons online travel businesses and travel agencies continue to have problems applying for merchant services. The demand has been satisfied by payment processing companies that specialize in hospitality and travel merchant services. Travel merchants working with Allied Payments are from many different segments of the travel industry.

Common Types of Travel Merchant Accounts

  • 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 finding account solutions for accepting payments. Finding a merchant services account 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 processing professionals specializes in all types of travel agent merchant accounts and tour merchant account services.

What are Travel Merchant Account Fees

Costs for a travel agency merchant account can vary drastically between payment processors and even merchants themselves. Many different factors can change the fees for each transaction. Online travel agencies with a proven track record of low refunds and chargebacks will almost always have lower cost structures verse startup or existing high risk businesses with high chargebacks. Some of the most common payment processing fees charged to online travel industry businesses 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)

travel agent merchant servicesThe discount fee is the percentage taken out by the customer’s bank, payment card network and the payment processor. This fee will vary between high risk 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 travel business with the best terms.

Transaction fees are another cost associated with processing payments.  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 than travel merchants with a lower-volume business account.  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 merchant accounts, the payment gateway solutions will also have additional fees. In some cases, the payment processor will wrap the merchant account and gateway together.  Most payment gateways will charge travel merchants a monthly fee and a transaction fee.  Unlike merchant accounts, payment gateway fees are usually set in stone and merchants are unable to negotiate these fees.

Other fees, such as chargebacks and refunds are billed to travel merchants on a case by case basis.  In some instances, when a travel merchant is applying for a high-risk 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.

Merchant Account Chargebacks for Travel Businesses

travel agencies merchant servicesThe largest concern of financial institutions, including payment processing companies 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 for unforeseen changes.

Another issue for the travel industry stems from the businesses themselves. Many travel agencies and tour companies end up closing their businesses and merchant accounts 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 accounts for travel services.  Startup travel businesses will usually need to partner with a high-risk provider until they have a history.

Finding the best Travel Credit Card Processors for Travel Merchants

Businesses in the travel and tour industry should spend time researching and questioning potential merchant services companies. Setting up high risk merchant accounts with a merchant services provider not equipped to handle tour and travel payments can become an expensive decision in the future.

Merchants knowing that the payment processor and/or bank readily accept merchant accounts for tour operators and travel agents is an essential step.  Many times a travel business will apply with a payment processing provider only to find out later that they are a prohibited high risk business type and have their merchant accounts closed and funds held.  This type of problem can lead to canceled transactions and losses by businesses due to costs they incur at the time of booking.

One of the largest concerns for travel merchants are the customer chargebacks that hit their merchant accounts.  The travel industry has an ominous history of problems with customer payments.  The benefit of having travel merchant accounts lies in the fact that banks and payment processors are familiar with travel business operations. Payment processors specializing in international merchant accounts for the travel industry are also prepared to handle higher percentages of chargebacks.  While travel industry businesses need to remain within acceptable tolerance levels, many banks and processors understand the problems with chargebacks facing the industry and are able to work with these high risk 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 verify that the travel agencies are properly stating the terms and conditions of their business.  Requiring customers to accept the terms and conditions while listing their refund policy will during disputes. The companies comprising 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.

Apply for Merchant Account Services

Even though credit card processing for travel agencies and other businesses in the travel industry is a high risk, it’s still possible. Travel merchants will have to demonstrate a reasonable level of risk to maintain a reliable payment processing system. At Allied Payments, we can help high risk businesses operating in a responsible manner find hospitality merchant account services without excessive costs or fees.

  • No application fees
  • Competitive Rates and Fees
  • Payment Gateway with easy shopping cart integration
  • Fraud Protection to Prevent Chargebacks
  • Virtual Terminal available

With minimal documents and a simple application, most travel agencies can have their merchant accounts 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 the best travel merchant account today!