Travel service businesses such as travel agencies and airlines are notorious in the payment processing industry for generating prohibitively high levels of credit card fraud and chargebacks, particularly in transactions where the cardholder places his order over the phone or on the web. As a result, merchant accounts for travel service industries are typically hard to get and offered on unfair terms to the merchant. Processing costs for these businesses have reached such proportions that many if not most payment processors decline to offer merchant services to startup travel agencies and thoroughly vet applicants with prior processing history to verify that they have a successful strategy to reduce fraud, customer disputes and chargebacks.
What Are the Risks for Payment Processors?
Airlines, travel agencies and booking agents have what is known as “high ticket travel” charges; in other words, their charges tend to be expensive. Next day flights and last minute ticket bookings are typically much more expensive than advance purchase options. Combined with the fact that the purchaser often is not face-to-face with the seller, the potential for customer disputes over charges is great. With transactions that occur months ahead of travel dates, legitimate sales can turn into chargebacks. Cancellation fees are often disputed by purchasers who abandoned their travel plans due to illness, work or family emergencies. These are legitimate transactions; factor in fraud and one begins to see why card processors are leery about servicing the travel industry.
Risk Management Strategies to Reduce Customer Disputes and Fraud
- High ticket charges expose the booking agent to chargebacks and fraud. Carefully review these transactions by confirming bookings with cardholders through identity verification and periodic review of the purchaser’s travel plans.
- Identify key indicators of known fraudulent transactions. Retain the information in a database that can be used to make risk assessments. Basic info should include 1) Both passenger and cardholder names, addresses and telephone numbers; 2) Email addresses, IP addresses and ISPs; 3) Transaction date and time, amount, airlines, class of service and travel itineraries.
- Screen high risk bookings. Red flags include 1) Passenger name is different from cardholder name; 2) Purchase of first or business class tickets; 3) Etickets or paper tickets delivered to addresses that differ from the billing address; 4) Date of travel is less than six days after date of purchase.
Choosing a Merchant Account Provider for Travel Service Businesses
Like it or not, it’s an inescapable fact that the travel service industry poses a high risk to payment processors. Rather than waste time and money negotiating with banks who won’t work with your business or only offer exorbitant rates for processing, choose a brokerage service that can work on your behalf to find the most cost effective solution. Emerchant Broker can refer to their extensive network of both onshore and offshore high risk merchant accounts that will best serve your business. Emerchant Broker offers the ‘100% Worry Free Guarantee’ to their clients; if you’re not happy with the initial provider, eMerchant will find a new provider within their network without charging you a cancellation fee. They’re an “Accredited Business” with an ’A’ rating from the Better Business Bureau.