Why Travel Merchant Accounts Are Considered High-Risk

Certain business categories that are considered high-risk from a payment processing standpoint. The travel industry happens to be one of them. It has nothing to do with the operations or business practices of individual travel agents. The high-risk label is based on the nature of the industry. It has more to do with the inherent financial risk of the sales transactions than anything else. Travel merchant accounts are highly susceptible to fraud and an elevated level of chargebacks.

Chargebacks and Fraud

The combination of these two negative actions prevents most banks, and payment processors, from taking the risk of working with travel-related businesses. Fraud is more likely to occur with the purchase of big-ticket items. Criminals do not typically steal credit cards to buy a pack of gum. A chargeback basically means that the customer is disputing the purchase. In the travel industry, chargebacks tend to happen when customers change their mind or feel buyers’ remorse. Once again, this is related to the purchase of big-ticket items.

For example, it is far more likely that a person will change his or her mind immediately after buying a $1,500 item versus a $15 item. So where does that leave organizations that work in the travel industry? It is impossible to stay in business without the ability to accept credit card payments from the customer base. Consumers are not going to pay for their vacations and business trips in cash like they did in the good old days. The good news is that there are payment processing specialists, like Payment Savvy, that are willing to take the risk.

The Solution for Travel Merchant Accounts

There are a few factors to look at when choosing the best payment processing partner for your travel related business. The high-risk payment processing specialist should have years of experience working with travel-related businesses. The travel industry is unique. That means it has its own set of unique challenges and situations to deal with. Your high-risk payment processing specialist should offer their services without adding excessive fees. It must be noted that the high-risk merchant account provider is taking additional business risks by working with companies in the travel industry.

The fees will reflect the additional risk. However, it should be reasonable, and affordable. Credit card payment processing fees are the cost of doing business. They should not prohibit the ability to conduct business. The high-risk merchant account specialist should also have the ability to set the account up quickly, and efficiently. The faster everything is up and running, the sooner your business can start making money. There is one other important aspect that you need to consider when choosing a high-risk processing partner.

They should have the processes and protocols in place to ensure that your business will receive uninterrupted credit card payment processing services. Although companies in the travel industry are labelled high-risk, it is not necessarily a negative circumstance. Believe it or not, there are some benefits. We will review them in Part Two of this article.

Travel agencies, and other related travel industry businesses, are considered high-risk from a credit card processing standpoint. This fact makes it next to impossible to obtain a merchant account from banks and most payment processing companies. However, a merchant account is needed in order to provide customers with the ability to pay for goods and services with a credit card. Credit cards are the preferred payment choice for most consumers, particularly for big-ticket items.

Fortunately, there are a few merchant account providers, like Payment Savvy, that offer a solution to this unfortunate situation. A high-risk travel merchant account provides the travel industry with the ability to accept credit card payments. In order to offset some of the financial risk, high-risk travel merchant accounts typically have higher fees than standard merchant accounts. A quality payment processing specialist, like Payment Savvy, will make certain that the fees are only slightly higher than their standard merchant account offerings in your to help your bottom line.

How to Make High-Risk Merchant Accounts Work for Your Business

High-risk merchant accounts are supposed to help your business grow, instead of stunting that growth. Although the fees may be slightly higher, high-risk travel merchant accounts offer a few advantages over standard merchant accounts. For example, there are fewer restrictions on earning potential. Standard merchant accounts typically have limits regarding the amount of credit card transactions than can be processed per month. They decide upon the limit amount on a case-by-case basis.

Imagine if your business was limited in the amount of credit card transactions it could accept each month? What happens if the company is in a growth phase that outpaces the limit restrictions? The good news is that you do not need to worry about that problem with a high-risk travel merchant account. There are no limits of that nature. In addition, standard merchant accounts typically cap individual purchase amounts to $500 or less. That simply does not work for industries that sell big-ticket items that sell for over $500.

High-risk travel merchant accounts do not incorporate the use of purchase price caps. As long as the consumer has enough credit to make the purchase, they may do so without restrictions. Another tremendous advantage of a high-risk travel merchant account is the chargeback factor. When a standard merchant account suffers from a high amount of chargebacks, the account can be terminated with little to no notice. That leaves the business without the ability to process credit cards until a resolution is put into place.

When organizations lose their ability to process credit cards, for any extended period of time, it leads to significant loss of revenue. High-risk travel merchant account providers expect chargebacks due to the nature of the travel industry as outlined in part one of this article. It takes more than a few chargebacks for a provider to terminate the account. However, chargebacks are not good for any business. It also means that the sale is lost. Responsible business owners and operators take measures in order to avoid them.

A high level of customer service, sending out thank you emails after the purchase, and following up with customers to answer questions & concerns goes a long way in keeping that hard-earned sale.

Payment Savvy specializes in providing clients with creative and efficient methods of doing business. Please contact Payment Savvy today for answers to your questions, to review all of your options, or to apply for a high-risk travel merchant account. We look forward to hearing from you and working with your company.

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