Why Do You Need A Merchant Account To Start A Travel Business?
The necessity of travel merchant accounts has seen a significant increase over the few years. Many people prefer travel agencies to travel domestic and international places. But like other companies, the travel industry is facing chargebacks that harm the business.
So, before starting a travel business, choosing a perfect merchant account and a high-risk payment gateway is important. This article will let you know about merchant account requirements, application procedures, etc.
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What Is A Merchant Account?
Merchant accounts allow the travel merchants to accept the payments made by the customers via mobile, online, or in person. The payment methods may consist of debit cards, credit cards, gift cards, or others.
This type of account is generally an agreement between the merchant, payment processor, and merchant’s bank to settle a transaction. When a customer pays for a ticket booking, tour package, or other services, the money is deposited into the merchant account. Eventually, from there, the fund is transferred to the bank account.
The travel merchants can utilize numerous equipment for the acceptance of payments. Online travel businesses use virtual terminals or payment gateway, while storefront businesses use POS machines or credit card terminals.
Whether it is a car rental, airline, train, or hotel, every travel business will have a merchant category code. Processing transactions using an incompatible MCC code can even lead to the termination of an account.
Affordable and trustworthy travel merchant accounts are not effortless to obtain always. The main reason behind this is that the travel business is at high risk.
Why Travel Businesses Need Merchant Accounts
The primary reason travel businesses are considered at high risk is the higher chances of chargebacks than other businesses. A merchant account is necessary to prevent the company from all types of losses.
According to various reports, the travel industry faces approximately $25 billion in chargebacks and fraudulent transactions annually. Here are the main reasons behind the chargebacks faced by the travel industry:
- Advance payments: Accommodation, transportation, and other expenses related to a trip are paid for months or weeks before the occurrence of the trip. Many things can happen during this duration, like life events, changes in plans, etc., which can cause chargeback transactions.
- Expensive tickets: The price of tickets, lodging, and food are increasing day by day. Some travelers knowingly file chargebacks after purchasing to avoid payments. These are also known as friendly frauds.
- Lack of infrastructure: Many travel startups do not have high-quality customer support to deal with customers’ inquiries and concerns. Customers who cannot raise concerns can go to the payment card issuers for chargebacks and returns.
- Recurring payment default: Customers who make payments in installments for the future trip may dispute a charge appearing on their credit card statement. Before processing a chargeback request, issuing banks cause the customers to contact the merchant.
- Industry risk: Nowadays, many travel businesses face financial crises or declare bankruptcy. Also, banks experience fines when chargebacks surface the ratios needed by the card brands.
How To Apply For A Travel Merchant Account?
Applying for a travel merchant account is an easy and trouble-free procedure. Merchants need to submit a complete application regarding company details. Following are the required documents:
- Payment processing statements of last 6 months
- Certificate of Incorporation
- Passport copies signed by company owners & employees
- Certificate of Incumbency
- Other documents of the company
US-based travel merchant accounts need 3 to 5 working days to get approval. On the other hand, the approval period for an international travel merchant account is 5 to 10 working days due to time zone considerations.
A travel business needs to have a monthly payment processing history of $50,000 to qualify for a travel merchant account. Merchants must contact a dedicated and reliable travel merchant account specialist for a smooth and hassle-free application process.
How To Choose The Right Merchant Account?
Choosing the right merchant account can be a little confusing and time taking. So here, we have mentioned some of the best qualities that a perfect travel merchant account must have:
Multiple Payment Options
A travel merchant account must have numerous payment options for the benefit of the customers. All customers look out for their preferred payment method to get their payment done hassle-free. So, choose a travel merchant account having multiple payment options like credit cards, debit cards, gift cards, UPI, or any other method.
Travel merchant accounts must have advanced fraud protection tools to avoid cybercrime and other fraudulent activity. Multiple fraud-fighting tools help gain the customers’ trust and ultimately increase profit.
A reduction in processing fees enlarges the company’s profitability by attracting more customers.
Banking Level Security
Use high-risk payment gateways to reduce the chances of chargebacks and thus increase the business. Also, payment gateways help encrypt the customer’s payment data which ensures more security and safety.
Multi Currency Payments
Currency conversion is an important factor that will help travelers make payments easily without facing any trouble. Add country-specific payment options to enlarge the profits and orders.
Excellent Customer Service
Top-quality customer service is necessary to attract customers and solve the customers’ inquiries. So, all merchant accounts need to have well-trained staff to increase company sales.
The right merchant account plays an important role in providing the finest experience to its customers. Travel merchant accounts help the company to get financial security and flexibility. Before starting a travel business, we must ensure our merchant account provider is loaded with high-quality protocols and processes.
Selecting the right merchant account is mandatory to increase the profitability of your travel business. If you are looking for a high-risk merchant account provider online, check their background and reviews properly.