Online Travel Merchant Accounts | Understanding the Basics
According to a 2019 World Travel and Tourism Council report, the travel industry experienced a 3.5% increase, surpassing the global economy of 2.5% for the 9th consecutive year. With the ever changing economy, the travel and tourism industry is continuously trying to re-invent itself during these uncertain times. Online travel merchant accounts and secure payment processing solutions are in constant demand and SecureGlobalPay is here to assist.
With the above referenced astronomical figures, it is hardly surprising that the travel industry contributes trillions of dollars to the world’s GDP and accounts for millions of jobs worldwide.
As a matter of fact, travel and tourism generates approximately 10% of all employment positions in the world. In other words, 1 in every 10 jobs is linked to the travel industry.
Globally, 109 million people work directly in the industry. This number is equivalent to the number of people living in Italy and South Korea combined and includes hotel staff, chefs, tour guides, air stewardesses and pilots.
An additional 183 million people are indirectly connected to this industry and depend on it for their livelihood.
Examples of people who provide these supplementary services include electricians, taxi drivers, food sellers and craftsmen among many others. These third parties often use mobile payment processing solutions to help compliment the travel industry in gereal.
The growth of the travel and tourism industry continues to outpace the global economy because people have a never-ending burning desire to travel the world, meet people and experience new cultures.
And this desire has been made easy through the widespread use of electronic payments as well as the Internet.
Travel businesses that benefit from accepting travel-related payments online include the following:
- Travel clubs
- Travel agencies
- Membership and club programs
- Tour operators
- Transportation services
- Travel ecommerce sites
- Vacation packages
These businesses need the assistance of high-risk merchant service payment processors for their online travel merchant accounts. These experienced professionals can help provide a seamless and efficient way for people to pay for their travel experiences.
But opening an online travel merchant account is not a straightforward process because travel merchants are often categorized as high risk by acquiring banks.
Fraud and Chargebacks in the Travel Industry
The main reason why travel merchants are considered high risk is because of the excessive chargebacks connected to the industry.
1 in every 8 chargebacks is linked back to the travel industry which amounts to an estimated $25 billion loss every year.
There are 3 main factors responsible for high chargeback rates when accepting secure online travel payments.
High ticket sales: When planning a vacation, the cost of plane tickets, accommodation, food, tours and other costs easily add up.
People who are caught up in the euphoria of a trip to an exotic island are usually shocked when they calculate how much they are spending and want their money back.
Purchases in advance: Travel expenses like plane tickets and lodging are usually made, well in advance.
Since the payment for a trip is paid for well in advance, it can easily be canceled.
Industry failure: Banks are wary about doing business in this industry because of the heavy losses suffered in the past.
Thomas Cook was a travel and airline company that employed over 21,000 people and helped millions of people travel the world.
In 2019, the company declared bankruptcy and left over 600,000 unhappy travelers stranded.
The collapse of this 178-year old company sent shivers throughout the industry and is a reminder of its instability.
Thomas Cook has declared bankruptcy after failing to secure a multi-million dollar loan. And because it had no money to issue refunds, the onus fell on the acquiring bank
Applying for an Online Travel Merchant Account
If you want to easily qualify for an online travel merchant account, your business should show a minimum payment processing history of at least $50k monthly.
Dedicated travel and tourism underwriters that assist with the application process always ask for relevant documentation and previous processing history if applicable.
U.S. travel merchant accounts usually take 5-10 business days to accept payments. While international travel merchant accounts tend to take a bit longer to be able to accept secure online travel payments.
Picking the Right Tourism Merchant Account Provider
Low rates: Lowers payment processing fees and improves bottom line.
Multi-payment options: Accept credit cards, debit cards, e-checks and “in country” alternative payment methods.
Multi-currency credit card payments: Easy payments without the need for currency conversions.
Mobile App: Accessible payment options for those willing to pay with mobile devices.
Top tier security: Military-grade encrypted payment gateways and virtual terminals that protect your business and customers.
High volume transactions: Processing power that allows you to manage and grow your business without restrictions.
Multiple MID travel merchant accounts: Multiple merchant account payment processing and intelligent payment routing for chargeback mitigation. Processing through multiple MID’s will help increase bandwidth and card processing capacity for different segments of the travel industry when accepting secure online travel payments.
Documents Required for an Online Travel & Tourism Merchant Account
Certificate of Incorporation: This document confirms the legality of your company. Depending on the country on request, you can obtain this document in a matter of days or months.
It is imperative that you get this document before applying for an online travel merchant account.
Certificate of Incumbency: This is a similar document to the one above.
Valid ID’s or passports: Copies of valid identification documents including passports with signatures of owners and shareholders.
Bank Statements: Copies of the previous three months Corporate bank statements.
Application form: This helps a payment service provider understand your company’s geo-preferences, structure as well as turnover.
Website Requirements for an Online Travel Merchant Account
- Company name in footer
- Terms and Conditions Page
- Contact us button with active email and phone number
- Refund and deposit policy page
- Logos of all payment methods, particularly credit cards
Domestic Travel Merchant Account Vs International Travel Merchant Account
The decision on whether to operate a U.S. online travel merchant account, an international online merchant account or both depends on your niche market.
However, it is important to note that card approval ratios are highest when the acquiring bank is located in the same area as the traveler.
For example, if your travel agency targets Americans, a U.S. online travel merchant account will give you top approval rates on U.S. cards.
On the other hand, if you are targeting international travelers from the United Kingdom, France, Germany or Spain, it is important to have an acquiring bank in these respective countries so that your card rate approvals remain high.
Online international merchant accounts help you save money on processing fees if you leverage the lower-region interchange for cards in these respective countries.
In other words, it costs less to process a European credit card through a European bank than to process the same card through an American bank.
Travel businesses targeting both American and international travelers can onboard their multiple online travel merchant accounts with a single payment gateway to streamline all their operations.
Complementing card payments with other methods of payment is a good way to boost sales.
Alternative methods of payment popular among Americans include ACH and echecks. For international travelers, offering “in-country” local payment methods like bank transfers will surely get you more sales.
If you have any questions or are looking for assistance in establishing a payment processing account for your online travel business, look no further! SecureGlobalPay, payment processing solutions that make sense.