Among the many industries for which we offer high risk merchant services, travel and tourism merchant accounts seem to elicit the most questions and, truth be told, bewilderment. Many merchants, particularly startup travel merchants, are often stunned when told that travel and tourism is an industry laden with risk. Hence, not every acquiring bank offers the merchant account resources travel agencies need.
Instabill processes credit card transactions for high risk e-commerce businesses – such as online gambling, CBD, adult and nutraceuticals. Surprising to some, travel and tourism is regarded in the same risk level.
The risks with travel and tourism merchant accounts
In coastal New England, home office of Instabill, January through March is the time of year when the temperature rarely extends higher than the teens, and the most of the population is aching for warmer climes. Many are making travel plans for Presidents’ Week or Spring Break, a busy time for travel industry merchants.
Oftentimes, however, consumers are forced to postpone or cancel vacation plans, which can be the beginning of a nightmare for travel industry merchants, particularly those whose clients book months in advance. Two things can happen as a result:
- Traveler contacts the agent seeking a return: This is what the educated consumer does, and the travel agent dutifully obliges, hopefully making it an outstanding display of customer support.
- Traveler contacts credit card issuer seeking a chargeback: This is what the uneducated consumer does, and it’s a major hassle for the merchant. We recommend the merchant contact the consumer to request a reversal and offer a full refund (and maybe a perk on their next vacation booking).
“It’s all about the time from booking to leaving,” said Wendy Jacques, Sales Manager at Instabill. “Let’s say a consumer books a vacation three months out, then takes the vacation, but isn’t satisfied, for whatever reason. It’s really a nine-month window for a chargeback to occur.”
Additionally, noted Ms. Jacques, it is common for travel agents to deposit payment from the consumer before the consumer takes the vacation. “It is a huge risk,” she said.
Travel agency merchants: Don’t do this
We’ve offered travel and tourism merchant accounts since 2001, and occasionally we’ll see a merchant institute non-refundable deposits. Travel agency merchants need to make a living, we get it. But this is a practice that can lead straight to a chargeback. For example, a traveler books a vacation and pays the ‘non-refundable’ deposit with a credit card. Perhaps there was a natural disaster at the vacation destination, the traveler fell ill or took a new job — whatever the excuse — and had to cancel.
The traveler will simply file a chargeback with said travel agency to receive his/her non-refundable deposit, and likely win. However, we see more and more cases where consumers are purchasing travel insurance in light of the above cases.
Travel business merchant accounts: What merchants need
The most successful travel agents we know are excellent communicators, proactive with their clients and with a sixth sense for perceiving situations that can lead to chargebacks.
Along with this sixth sense, the following components are helpful also:
- Solid payment processing history and business bank statements
- If startup, personal credit history, bank statements and healthy capital
- Proven chargeback management and mitigation
- Incorporation/sole proprietor documentation
View our merchant account application checklist for other necessary KYC documents.
As always, Instabill merchant account experts are on hand to guide travel and tourism merchants through the merchant account process. Live support is available at 1-800-530-2444.
