Over 50% of all travel reservations are now made online. Travel and hospitality is the world's largest industry, with the World Travel and Tourism Council (WTTC), predicting revenues in excess of US$15 trillion by 2017. Travel merchant accounts are established by all segments of the travel industry including: transportation, hotel reservations; timeshare, membership clubs, vacation certificates; newsletters; travel agencies; tour operators and packages.
It is frequently challenging for a company to find a payment processor willing to underwrite a travel merchant account. The reason is that
Travel Merchant Accounts are classified as high risk. High risk merchant accounts, statistically, have a higher incidence of chargebacks and fraudulent transactions. Travel merchant accounts are susceptible to chargebacks for a number of reasons. Travel is an emotional purchase, combining both the excitement of new adventure with the fear spending a lot of money for an unknown outcome. A company can offer the best customer service, but the degree of emotionalism involved in purchasing travel makes it difficult to avoid a certain percentage of unhappy customers.
As a result, there are endless reasons that travellers can chargeback transactions in what is known in the industry as friendly fraud. For example, a traveller can initiate a chargeback against a tour company claiming that the tour was not delivered as advertised. Or travellers can asset they did not authorize a transaction. Other high risk elements of travel merchant accounts include high average tickets and extended delivery dates. Travel and tour packages can run to thousands of dollars. It doesnt take too many high ticket revokes to negatively skew travel merchant accounts chargeback ratios.
Travel is also booked far in advance. The longer the time between booking and travel, the more time there is for consumers to change their mind and seek refunds. If refunds are not immediately delivered, lots of consumers know how to play the system and initiate chargeback proceedings against the merchant. But, travel merchant accounts are desirable to many payment processors and acquiring banks. Travel merchant accounts tend to be high volume, processing millions of dollars per month in transactions. So, in spite of the risks associated with travel merchant accounts, there are many excellent payment processing solutions available. It is prudent business to establish multiple travel merchant accounts in a variety of jurisdictions to maximize revenues and mitigate risk.
By their very nature,
Travel Merchant Accounts need to handle international payments. Naturally, accepting credit cards is important. Travellers from the US and UK like to book online travel using credit cards. But, in other parts of the world, credit cards are not commonly used. Therefore, a good travel merchant account must provide alternative payment options that are preferred by international travellers The most important alternative payment processing to include in a travel merchant account is local bank transfers. This allows travellers to electronically transfer funds directly from the travellers bank account to the merchants bank account. Local bank transfers are much less expensive than credit card transactions, greatly reducing merchant payment processing fees. Another advantage of local bank transfers is that once the transaction is complete, there are no chargebacks. All monies are cleared funds with payments being similar to cash transactions.
