If you’re a travel agency in need of a travel merchant account, then we’ve got the perfect guide for you. Click her to learn how to choose the best account for all of your agency’s needs.
There are a lot of challenges in creating a travel merchant account. If you’re new to the travel industry or you’re about to start a travel business, you’ll realize this as soon as you try to set up a payment processor.
Even though the travel industry has exploded in recent years and nothing but smooth sailing and growth are in the industry forecast, it’s hard to find a payment processor for travel agents.
That’s because travel is considered a high-risk industry for payment processors, so there are going to be hoops that you’ll have to jump through just to accept credit card payments.
That’s not the best way to start a business and it can take the excitement out of one of the best moments when you’re starting a business – accepting your first payment.
Read on to learn how you can find a travel merchant account for your travel agency.
Challenges of Accepting Payments in the Travel Industry
It was already noted that travel is considered a high-risk industry. Let’s look at the reasons why.
Chargebacks
It basically comes down to how the business operates. Customers will pay a large sum of money to the travel agent in advance. This often results in a high amount of chargebacks.
For example, you might have a client book a tour months in advance. They might have to cancel and want a refund. Since you already put a lot of legwork into their trip, you have a policy where you keep the deposit.
The customer gets annoyed with you and the policy and calls their credit card company to file a chargeback.
That means that you and your credit card processor lose money on the transaction.
Growing Number of Payment Options
There are other challenges, too. As the travel industry is global, if you expand into new areas, you’ll have to be able to accept new payment method and currencies.
Not only that, but certain markets have their own regulations that you need to be aware of.
Consumer Protection
Fraud is a big deal in the travel industry, especially for cards, not present purchases. These fraudulent charges have cost airlines between $2.4 and $4.8 billion every year.
It’s not just airlines that suffer. Every aspect of the travel industry is at risk, including travel agents. You may have thought that you booked flights for your clients, only to find that the transaction didn’t go through because the bank or credit card company thought it was a fraudulent transaction.
How to Get a Travel Merchant Account
With all of these challenges travel agents face, how can you possibly get a travel merchant account?
As a part of a global industry, you have to find a payment processor that understands the risks involved and the unique nature of accepting payments in the travel industry.
Avoid the Usual Payment Services
If you’re just starting out or you’re not happy with your current payment processor, it may be tempting to sign up with flat rate processors like Square and Stripe.
While these processors are convenient, they don’t do business with travel agencies due to the risk. Even PayPal is cautious when it comes to travel transactions.
All it will take is one or two chargebacks and your account can be terminated.
Check with Other Agents & Associations
Your first step in finding a travel merchant account is to ask around. Check with other travel agents to see how they operate their payments.
Better yet, check with an industry association like the American Society of Travel Agents.
They would be in a good position to recommend merchant services for travel agencies.
It won’t hurt to join these organizations because there are classes that you can take for a relatively low fee that will help you get approved for a high-risk merchant account.
Compare Payment Processors
When you compare payment processors, you’ll want to look at a number of items. You want a company that specifically works with travel agents and can help you refine your policies and procedures to limit and prevent chargebacks.
Rates
You should expect to see high rates with a high-risk account. Over time, you’ll be able to establish that you’re a lower risk by having a track record with no issues and steady growth.
Ask the payment processors how long it will take before they are in a position to lower rates on your account.
Check Your Financial Record
Before you start contacting a payment processor for travel agencies, you want to have your ducks in a row.
This is an excellent time to review your financial records for the past 6 months. You’ll need to prove a series of successful transactions (read – no chargebacks), a bank balance with steady growth, and predictable income and transactions.
As you present your application to the merchant services team, you’ll need to be transparent. Remember that anything inflated will be discovered, and your account could get shut down or your application denied.
If you’re a new company without a track record, give as much information as you can in your application.
Items of interest to merchant services companies are your marketing plans, customer service policies, refund and deposit policies, website and data security measures, and the volume of transactions you expect.
Be Prepared for Questions
If you’ve been in business for a while, chances are you have a great financial record. If you’re just starting out, you may have some additional obstacles to clear to prove that you are a lower risk client.
Regardless of your status, your payment processor will ask you a number of questions about your business history.
This is a normal part of the process before you’re approved for a high-risk account.
Getting a Travel Merchant Account Is Possible
It may seem unusual that a travel merchant account is so hard to come by, but when you look at the amount of fraud and chargebacks that happen, it’s understandable.
Just because it’s difficult to get a merchant services account in the travel industry, it doesn’t mean that it’s impossible.
You just have to be prepared to have your financials scrutinized and be ready to answer additional questions about your business.
Once you do that, then you’re going to be ready to accept payments – the best thing about business.
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