The travel and tourism industry makes trillions of dollars every year. In the last 7 years, the industry has been responsible for 1 in every 5 new jobs created. With travel restrictions slowly easing up, finding the right payment processor to accept travel related payments online is key. A proper merchant account for travel has never been more important should you wish to take advantage of this lucrative industry.
It is a service sector that caters for 10% of the world’s employment—that’s 1 in every 10 jobs. These teeming numbers come down to a rough estimate of the population of Italy and South Korea combined.
Whether it is taking a vacation to Bali in Indonesia or organizing a tour to the small volcanic island of Ischia in Italy, there has never been a better time to be in the travel business. Accept travel related payments online with SecureGlobalPay.
According to a survey, Americans spend 200 hours a year (an equivalent of 24 days) daydreaming about vacations as an escape from their busy lives.
The travel industry is a booming place to start a business. As soon as you find a location and put all your relevant documents in order, getting a merchant account for your travel business should be the next thing on your mind.
What is a Merchant Account for Travel
The massive growth of the travel and tourism industry is mostly due to people paying for their travel online. These payments are mostly made via secure payment gateways through various high-risk merchant account providers like SecureGlobalPay.
When people have the time or money to experience new adventures, they want to act on those desires quickly. And payment by credit card provides them the opportunity to do so.
Most travelers use electronic credit card payments when browsing online travel sites. This makes them impulsive because as soon as they see something they love they pay almost immediately.
A travel related merchant account makes it easy for travelers to pay online with credit cards, debit cards, ACH, eChecks and other types of electronic payments like crypto.
Virtual terminals are often used at retail locations and various sales channels. These types of high-risk merchant accounts can also take mail order/phone order payments to accept credit cards.
Even though opening a merchant account for a travel business is pivotal to success, it is not an easy task to open one. The major reason for this is because the travel industry is classified as high risk.
Reason Travel Businesses are High Risk
A major reason why travel businesses are regarded as unsafe is because of the heavy financial losses they record every year.
When it comes to traveling, people have a habit of making their reservations ahead of time. It’s a good thing to be organized and plan things ahead, but the flip side is that it leaves plenty of room for things to go awry and make travelers cancel.
There are different reasons why people cancel their travel trips. But the main reasons that have emerged are injuries and illness. People do not travel for leisure when they are sick or tend to go on vacations in arm slings.
These cancelations often lead to chargebacks and rank the travel industry as having one of the highest chargeback rates in the world. Over 62% of U.S. adults have at one time or the other canceled a hotel stay, airline flight or approaching event.
Another reason why merchant accounts for travel agencies are considered risky is because they deal with high ticket packages. A single transaction can often be in the 10’s of thousands for cards processed. Cardholders often do not have these large credit limits available and occasionally have to use multiple credit cards to pay for pricier travel packages.
A travel vacation package that will take you to the Plitvice lakes in Croatia costs at least $20,000. If you are looking at a honeymoon package for yourself and significant other to Maldives, you should pencil down at least $30,000 for the adventure.
Again, if there is a cancelation, the money has to be refunded. This can incur losses for both the card holder and the payment provider.
Transaction volumes in a high-risk industry like travel tend to be a source of worry for financial institutions and merchant service providers. If a big travel agency files for bankruptcy, there will be a dramatic surge of chargebacks that they will have to pay.
This is exactly what happened when Thomas Cook, a global travel agency after struggling with enormous debt.
The sudden collapse of the global travel company left 600,00 travelers stranded across the world. Most of them had paid for their trips, but the former travel company was not in a position to offer refunds. Thomas Cook left the acquiring bank with an enormous amount of debt.
Opening a Travel Merchant Account
Opening a merchant account for travel and accepting travel related payments online is not as fast as opening a low risk account. But it is a simpler process today.
Here are a range of documents that you need to have before trying to get a merchant account for your travel business.
Certificate of incorporation is a document that shows that your company is legally registered. It might take 4 days to 4 months to get this document. Keep this in mind when applying for your merchant travel account. Do not show up for an appointment without this vital business document.
An incumbency certificate is an official document issued by a corporation or limited liability company (LLC). It lists the names of current directors, officers and major stakeholders.
Valid passport copies and state issued identification documents bearing the signatures of company owners and officers.
A thoroughly completed application answering questions that border on turnover, company structure and geographical preferences.
Merchant account underwriters can take a look at your application and determine if your travel business has the right to accept payments. Your travel company is expected to abide by certain standards and not pose a financial risk down the road.
Underwriters usually ask for supporting documents that contain detailed financial history, especially if a merchant is looking at processing a high transaction volume within a short period of time.
Be prepared to make available financial documents like bank statements dating back 3 to 6 months. You may be asked to show as much as 2 years in the form of profit and loss statements along with balance sheets.
Keep in mind that if approved, your account will be closely monitored by a high-risk account provider. So be open and forthcoming in your dealings and do not surpass your transaction volumes early.
Online Requirements for a Travel Merchant Account
Your travel merchant account can be used to receive payments in your physical office and online. If you are looking to boost revenue, an online presence for your travel agency is a must. Ensure that your website meets the following requirements before submitting your application:
- Company name in the footer
- Deposit and refund policy page
- Terms and conditions agreement page
- Logos of payment methods e.g. Mastercard, Visa, Paypal, American Express, Discover, UnionPay etc
- Contact us chat button, email and phone number
Safe and Secure
Always give your travel business environment a good look. Make sure it is secure and well protected. Simple things like shredding tangible paperwork containing credit card numbers and installing anti-phishing or virus protection software on all computers can easily be taken for granted.
Stick with strong policies regarding your employees using user IDS and passwords. This goes a long way in protecting your travel business from being breached.
It is true that travel merchant accounts take longer to approve than low risk accounts. The high number of chargebacks and fraud play a big part in this..
Take the time to sort out your business licenses, tax IDs and anything else needed to efficiently run your business on all fronts. These documents will help streamline your application process and help improve your chances of opening a merchant account for your travel business. Accept travel related payments online with SecureGlobalPay.