Reasons Why Your Travel Business Needs Merchant Account
The requirement for travel merchant account has rapidly grown over the last few years. No wonder that the cost of air travel has tremendously dropped and thanks to the internet for making it so easy for travellers like us to book online tickets easily. This is the reason why the travel industry has expanded of late. If we go by reports, the travel industry is said to be one of the fastest growing sectors. Travel industry thus becomes highly lucrative. Soon in the upcoming years, the travel industry is bound to become glorious, and it will happen pretty soon.
So, what makes the travel industry high risk?
One answer to this most commonly asked question is the number of chargebacks. Since there are so many platforms to book online travel ticket, customers are always looking for better options, and the amount of cancellation happens on travel booking on a day is enormous. This is the reason why banks feel a little anxious to do business with travel companies. And hence, it becomes problematic for the travel merchant account to deal with banks for payment gateway solutions. If you don’t know what chargeback is, then it happens when the credit card provider asks the merchant for a refund claiming it to be a fraudulent transaction. This is the biggest reasons why the travel industry is considered to be so risky.
In most of the cases, a travel agent will accept payment as a third party. The travel agent can charge a customer for a host of things, for example, the airfare, hotel stay, travel packages, and so on. The list never ends. However, when there is a change in these transactions, which is sometimes uncontrollable by even the merchants, then the customer raises an issue with the bank for a chargeback. This is when a chargeback is applied, and the merchant is fined with a chargeback.
Another reason is when there is a significant transaction which is over the average sales amount; then this could also raise an issue and thus create a security issue. Often travel agents don’t inform their service provider about the large transaction which happens through a customer’s credit card. Because the processor has no prior notification about this transaction and there is no communication from the merchant, it raises a use and can even cause a delay in funding and payment transfer.
The third popular reason why this industry is considered to be risky is when the customer books a ticket for a travel package and the merchant gets paid but still issues a chargeback. This happens mostly when the planner has to go to a new city for travel purpose after 2 or 3 months. Now, the customer pays the full payment or half depending on the deal; the agent gets paid for the amount accordingly. Now, since he will go only after 2 or 3 months, anything can happen in between, and the customer may ask for a refund. When the merchant denies the refund, the customer talks to his or her bank to claim for a chargeback.
This is the reason why it becomes essential for the travel company to apply for a high-risk merchant account. However, you should know that that getting your high-risk travel merchant account is not easy to get, but not impossible. Your high-risk payment processing service provider must have relevant experience in the same domain. He must show you proof of working with the travel industry. The travel industry is very unique, and it has its own set of obstacles to overcome. The high-risk merchant account service provider that you will get in touch with must listen to all your requirements and shouldn’t charge you exorbitantly. However, readers may note that high-risk merchant account provider is already taking risks in working with you so, the fees for a high-risk merchant account is a bit high, however, never unmanageable.
The fees they charge is based on the risks that they are willing to take on your behalf. They must offer you a price which is reasonable, and you can afford it easily; although beware of phonies and false claims. Some offer you lucrative discounts, and in the end, may charge your really high fees for each transaction. Your merchant account provider should not create any hindrance in operating your business. A good merchant account should give you a reliable payment gateway which will accept all kinds of credit cards too for the transaction.
Along with all this, make sure that your merchant account provider is well-aware about processes and protocols. Even though the travel industry is considered to be high-risk, it is not harmful. Your travel business is deemed to be risky in light of credit card processing. You will still need a merchant account to operate your business smoothly. Everyone prefers to pay by credit cards, and you will surely want to give the opportunity to your customers to pay by credit cards as well.
Fortunately, there are a few high-risk merchant account providers available online. You should read about them and look for reviews. Ask for references and check their background, for example, how many travel companies have they worked with, how long they are here in the industry, and so on. High-risk merchant accounts give you a scope to enhance your business and never puts a limitation on the amount of transaction you wish to achieve. Traditional merchant account provider can terminate your account too in case of chargebacks. However, high-risk merchant account work differently and allow you to solve the problem. High-risk merchant account gives you enough time to regain your reputation before terminating your account.