Flying Above the Drama When Obtaining a Jet Charter Merchant Account
As a high ticket industry, with considerable risk exposure, traditional merchant service providers may be wary of opening a merchant account for a start up airline or charter business.
As corporate profit reached record highs and per capita household income increased since 2012, the demand for nonscheduled air transportation services, according to a July 2017 report by industry research firm, IBISWorld. The market generates revenues of $23 billion and annual growth increased by 2.3% since 2012.
As the economic environment prospers and general business outlook becomes more confident, spending on luxury items, such as chartered flights, is anticipated to soar over the next five years, according to the report.
Despite this positive forecast, banks consider businesses in this industry too risky. Cancellations, unscheduled trips and large volumes of chargebacks, which are when a credit card provider demands a business refund the loss of a disputed or fraudulent transaction, are some of the reasons why traditional financial institutions don’t want to approve them for a jet charter merchant account.
A responsible, legitimate company that wants to process credit card payments efficiently must turn to a processor, like eMerchantBroker.com (EMB), to obtain a jet charter merchant account.
Since eMerchantBroker.com specializes in high-risk merchant accounts, such as private airline and jet charter businesses, it tailors payment processing solutions to meet every merchant’s needs. The practical tips and suggestions here make it easier to approved for a jet charter merchant account. Fill out EMB’s online application today and get approved for a merchant account within 24 and 48 hours. EMB also offers chargeback management tools, PCI-compliant payment gateways, and fraud filters.
Why a business needs a jet charter merchant account
Though there are more than 22,000 businesses in the chartered flight industry, banks don’t like to take a chance and approve them for jet charter merchant accounts. To efficiently and effectively process credit card payments, businesses, especially charter flight companies that rely on online reservations and payments, must obtain merchant accounts.
These merchants are considered high-risk businesses because they are prone to higher numbers of chargebacks, which is when a credit card provider demands a company to refund the loss on a disputed or fraudulent transaction.
Since banks will either turn them away or put very tight restrictions on them, jet charter merchants need to go to high-risk merchant account providers, like EMB. EMB’s underwriting team will review the application, which can be completed in minutes online.
With versatile payment solutions and lower card processing account rate structures through merchant account services, EMB helps businesses succeed. Devoted to exceeding customers’ expectations, jet charter merchant accounts can get approved in as little as 24 hours.
What’s needed to apply for a jet charter merchant account
Get started on the application process by filling out EMB’s quick and simple online application. Though nothing is guaranteed, EMB promises a streamlined process.
In addition to the application, the following documents are needed:
- A valid, government-issued ID, such as a driver’s license or passport
- A bank letter or a pre-printed voided check
- A secure, working website
- Three months of the most recent bank statements
- Three months of the most recent processing statements, if applicable
- SSN (Social Security Number) or EIN (Employer Identification Number)
Chargeback ratio below 2%
Fly through the underwriting process
The quickest way to get approved for a jet charter merchant credit card is to operate a legal, responsible business. When underwriters begin evaluating businesses, they check to ensure companies are built on stable business principles and don’t engage in any illegal activity.
Underwriters analyze businesses to determine their risk to processors. Credit scores, credit card processing history, bank statements, and websites are factors that help assess risk. These are evaluated to ensure that merchant don’t have negative bank account balances, outstanding bills, and a history of excessive chargebacks. At last, a jet charter business’ website is examined to ensure it has a secure (SSL), as well as well-established privacy and refund policies.
Private charter jet businesses that want to increase their chances of approval should:
- Have some money saved in the bank
- Pay any outstanding bills and debts
- Encourage the business principal with the best credit history to apply for the merchant account
Shrewd merchants not only want to get approved for merchant accounts, they want ones that aren’t burdened with higher processing volume caps and lower rolling reserves.
Getting higher credit processing volumes for jet charter merchant accounts
Every business wants to bring in high sales. Due to the risk associated with these types of businesses, many are given a monthly credit card processing volume cap. This means merchants are only permitted to handle a certain number of credit card transactions per month. Once that cap amount is reached, the merchant cannot take any more credit cards purchases, essentially keeping a business from operating. Higher volumes are essentially in jet charter businesses because of the high costs for services.
Merchants that succeed won’t get stuck with a cap forever. Jet charter merchants that need higher volume ceilings can request new caps in as few as three months if they can prove that they pay their bills, have low chargeback ratios, and have some savings.
Excessive chargebacks and more make jet charter businesses very risky
Private jet and airline merchants provide specialty air transportation or flying services with no regular routes and regular schedules, which is part of the problem. These on-the-fly services can make them more prone chargebacks. High-ticket values, the risk of travel cancellations, and the flexible billing practices by jet charter merchants are some of the reasons why these businesses are considered risky. For example, a one-way trip from Philadelphia to San Francisco in a piston-powered aircraft is estimated to cost between $13,822 and $24,608, according to US Sky Link, a partnership of several hundred charter owners in the world.
It is not uncommon for a person to book and pay for a flight, and then, change their plans or minds, and then, cancel it within the allowable periods of time. Though a customer is free to do this, it results in a chargeback to the jet charter merchant.
Banks and traditional financial institutions avoid issuing a jet charter merchant account because they are turned off by the industry’s irregular billing schedule, online reservations, and advanced scheduling.
Additionally, credit card processors also are taking on a lot more risk when they approve jet charter merchant accounts due to all of the expenses that come with operating this type of business. For instance, a jet charter business may sell hundreds of thousands of dollars in tickets in advance. If the merchant goes out of business, the processor could be left on the hook for the money owed to customers.
Many jet charter businesses don’t realize that their chargeback ratios, whether they are won or lost, contribute to their abilities to continue doing business until it is too late. Excessive chargebacks can lead to a terminated merchant account, and once it is shut down, it is much more difficult to get one a second time.
Calculating a jet charter merchant’s chargeback ratio
A private jet or airline merchant’s chargeback ratio is calculated by the number of transactions divided by its number of monthly transactions. For example, a merchant with 100 transactions and 4 chargebacks in a month would have a 4% chargeback ratio. The actual dollar amount of a chargeback doesn’t matter to credit card brands or processors.
Too many chargebacks leave credit card processors paying
When high-risk merchants have excessive chargeback ratios, credit card processors may be subject to thousands of dollars in financial penalties for each merchant account. Whenever a business exceeds a 2% chargeback ratio, credit card companies, such as MasterCard and Visa, can fine the processor that provided the jet charter merchant account.
This makes the merchants much less profitable for credit processors, causing them to them to terminate high-risk merchant accounts with chargeback ratios of more than 3%. If a merchant has 100 transactions and four chargebacks in a month, the business has a 4% chargeback. With margins for error so tight, merchants must not only try to keep their transactions volumes high they need to do whatever they can to avoid chargebacks.
Keep chargebacks from soaring
To prevent chargebacks from ruining a business, merchants must have a strategy for handling them. With time, evidence, and resources, businesses can avoid costly chargebacks.
To stop a transaction dispute from turning into a chargeback, a jet charter merchant will need to prove that a customer did, in fact, reserve and pay for the services. Detailed documentation that is kept organized for quick retrieval is crucial. Evidence, such as emails between a merchant and a customer and proof that a consumer used the same information or IP address on another occasion when a transaction was not disputed are important.
Also, the more trusted and transparent merchants seem to customers, the less likely they are dispute credit card transactions. Many chargebacks are a result of customers not remembering or recognizing transactions when they review their credit card statements. Sending an electronic receipt with the merchant’s contact information, such as an email and billing support phone number, will help customers remember.
Sending a customer satisfaction survey email immediately after a purchase or some time before customers receive their credit card statements also is beneficial. Survey results not only could be helpful in creating better customer service in the future, they also give jet charter merchants another opportunity to remind customers about their expensive purchases.
Having 24-hour customer service support is another way that can keep credit card transaction disputes at bay. If a customer can live chat with a representative, the employee could offer a full refund or come up with another solution that prevents the person from disputing a charge.
Trim chargeback ratios with a mitigation program
Since processors can terminate jet charter merchant accounts that don’t maintain chargeback ratios below 2%, merchants are hurting themselves if they don’t work to prevent chargebacks. A quick way to cut chargebacks by 25% is to use a mitigation program, like the one offered by EMB. Using the program, a merchant can prevent three out of every 12 potential chargebacks.
EMB’s Chargeback Shield program is ideal for high-risk merchants, such as jet charter businesses. EMB partnered with Verifi and its new Cardholder Dispute Resolution Network (CDRN) and Ethoca’s alert system to create a program that really works. The program is unique because CDRN works with card issuers and banks, which allows businesses to resolve credit card transaction disputes directly. Implementing the system allows merchants to achieve the highest rates of chargeback resolutions in the most efficient ways.
Jet charter and private airline categories to use
Federal statistical agencies classify establishments uses a list of six-digit numerical codes known as the Northern American Classification System (NAICS). The data is used to collect, analyze, and publish statistical information about similar types of businesses. Also, it is used to determine the way they impact the economy in the U.S.
Jet charters and private airlines often use the following NAICS codes:
- 481211: Nonscheduled Chartered Passenger Air Transportation
- 481219: Other Nonscheduled Air Transportation
- 487990: Scenic and Sightseeing Transportation, Other
Visit the United States Census Bureau’s Northern American Classification System to view the complete NAICS code list.
The four-digit numerical Standard Industrial Classification (SIC) codes are used to identify the main purposes of businesses. They are assigned by the United States and other countries.
Private airline and jet charter businesses exclusively use the
4522: Air Transportation, Nonscheduled SIC code.
Visit the United States Department of Labor to view a complete SIC list.
Airlines and Jet Charters
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