Ask any credit card processor about travel merchant accounts and they’ll very likely begin by mentioning the high risk nature of this kind of business. Travel agencies are known to account providers as high risk because of the industry’s reputation with relatively high numbers of charge backs.
According to the data logged by travel agencies, customers purchasing travel services have an increased probability of requesting their money back — which is the basic concept of charge backs. Travel agencies deal with this more often in general than most other kinds of businesses.
This is why merchant account providers lump travel businesses in the same risk category as businesses selling adult products, companion services, psychic readings, weight-loss systems with promised affects, and gambling activity. And since travel merchants are seen as equally high risk with all of these other markets, many with shady notoriety, it has become increasingly tough for travel agencies and the like to find credit card processors to approve them for an account.
A lot of times processors ask that the businesses applying for an account actually have experience with managing credit card processing already. That way they can see how well the business was able to adequately regulate the risks and sustain chargebacks within acceptable margins. Think of any well-known travel agency that you know and chances are they are very carefully tracked in regard to cash flow and charge backs. This is to make certain they are satisfactorily handling the high risk.
How about if you’re a travel agency and you want your own travel merchant account — what can you do to lessen your risk?
First of all, it is important that previous to opening a merchant account you comprehend the prospective sales agent accountability connected with vending airfare on the internet. For instance, if you sell a flight through your agency and a customer successfully disputes the charge or the flight was actually bought with a stolen credit card, then your travel agency is fully responsible for the cost of the flight.
Therefore, in order to decrease your risk to these circumstances it’s a good idea to establish card agreement guidelines and measures to tackle matters that come with credit card use. One option is to have an authorization request that is accepted by the issuer. This is supposed to signify that the card has a suitable status.
Of course, this action will not prevent all problems of fraudulence with credit cards. The authorization approval does not actually confirm 100% that the true cardholder is buying the flight. It also doesn’t assure that the payment will go through.
Keep in mind that more often than not, it is the travel agency that is held liable for fraudulent transactions and not the airline. Usually what happens is that the airline hands over financial responsibility to the travel agency it has aligned with as part of the contract settlement.
Once you’ve done your research about the liabilities involved in credit card processing for the travel industry, make sure to select a merchant account provider with the right know-how to effectively deal with high risk travel merchant accounts. If you go with Ultimate Merchant providers you’ll be reassured in knowing they have a great deal of experience working with high risk merchants and can assist you if you’re a travel business — new or old.