Americans who use their credit cards for purchases are protected against the incorrect and unfair credit billing under the Fair Credit Billing Act (FCBA). Owning a travel merchant account store or any online travel business without the proper payment gateway and fraud settings can prove to be costly.
FCBA in essence means that cardholders who do not recognize a transaction on their account or do not receive a product or service as promised have the right to initiate a “charge-it-back” or dispute on the transaction.
As a result, it is essential for any travel merchant account store to have a payment processor relationship that can immediately respond to the chargeback inquiry in the fastest way possible. This alone can help mitigate any potential losses due to lagging response times and other customer service related issues.
Responding to a Chargeback
Payment card companies and merchant services providers require specific documents to successfully dispute a chargeback. Travel merchant account stores or any online travel business can fight chargebacks if hard evidence is available. Having the proper payment gateway and fraud settings will help fight these disputes.
For starters, the travel merchant account store needs to show the exact payment methods used for transactions of the cardholder, show receipts and also prove it was also authorized by the same individual.
In addition, evidence that the service was provided or the terms and conditions of sale were acknowledged before the transaction took place is also very important.
In summary, travel and tourism companies or any online travel business in general must be able to provide information that shows the following:
- Identity of the cardholder
- Cardholder approved the transaction
- Cardholder agreed with the terms and conditions of sale
Obtaining this evidence showing these 3 things, in the fastest way possible can usually side things for many travel and tourism merchants. However, there is no guarantee that this documentation would resolve the dispute. Unfortunately, this liability extends to all high risk merchant accounts that accept credit cards and other card payment options.
That is the reason why finding a way of preventing disputes or reducing the risk from the get go, is actually the best strategy a travel company can have. It is extremely important to have the proper shopping cart for checkout purposes and a robust virtual terminal to process refunds as quickly as possible. Always reviewing and updating the necessary payment gateway and fraud settings is crucial for success.
Know Who You Are Dealing With
The best way for travel merchants to manage transaction disputes is to build great rapport with their customers.
Most travel companies that own an online travel business fail to realize how important it is to know the purchasing behavior of their customers. This insight helps a merchant to easily recognize a red flag when things happen outside a typical pattern. Not paying attention to these things can actually risk closure of your credit card processing relationship and termination by the acquiring bank if not checked properly.
For example, if Midas Travels and Tours know Mrs. Bradley, as a 65 retiree who spends $5,000 on holidays once in a year, suspicions would arise if she suddenly wants to spend $35,000 on a vacation.
It could be that Mrs. Bradley came into some money after winning the lottery. But a cautious travel merchant would not take that at face value and would examine the transaction closely. This red flag calls for additional verification before making an informed decision about accepting payment.
This singular act could end up foiling a criminal plot and saving the travel agency from having to pay back Mrs. Bradley 1000’s of dollars when she files a dispute.
Why Fraud is a Major Problem in the Travel Industry or with any Online Travel Merchant Account Store
A majority of transactions in the travel industry are card-not present payments and because these transactions are hard to verify, it increases the risk of fraud.
However, with a good management strategy in place, travel merchant stores can minimize this risk.
The first step is for a travel company to have someone or a whole department dedicated to fraud prevention. This is a responsibility that should be given to passionate professionals who stay on top of current trends and tactics criminals use to commit fraud.
These individuals must also know the best cutting edge tools that manage the risk of chargebacks and fraud.
Best Way to Detect & Manage the Risk of Fraud for your Travel Merchant Account Store
There are different ways to manage fraud cases, but many airlines, travel agents and other travel-industry related companies use the following strategies:
- Use of payment card company anti-fraud management tools e.g. Address Verification Service CID validation
- Third party tools e.g. negative list tools, email validation tools, machine learning technology, IP geo-location and device fingerprinting
- Fraud preventing scoring tool that calculates and measures the risks in transactions
- Cardholder and transaction information e.g. cardholder location, time of travel and prior experience with customer
Additional Tips for Detecting Fraud
Travel merchants who have built a rapport with customers have lower cases of fraud. Agents that accept transactions from unknown people without any further verification, do not get the same results.
But the following data points available from a transaction can help travel merchants appraise a cardholder’s identity as well as determine how risky a transaction could be before it leads to a chargeback.
None of the items stand alone and provide a full assessment of the customer or transaction.
However, when all these things are used together, they paint a clearer picture of the level of risk in a transaction.
Information of Customer
Name of passenger: Confirm the cardholder’s name matches the passenger name by calling the number at the back of the card.
Client history: Find out if a customer has done business with the company before. Was the experience positive or negative? If it was positive, chances of the customer initiating a chargeback is lower.
New customer: A new customer should be closely monitored, particularly if the person makes contact via email or TTY service (for those with hearing challenges). Fraudsters always try to minimize human contact.
Caller ID: If caller ID shows the customer is calling with Voice Over Internet Protocol (VOIP) that is a red flag because it is difficult to know where a call is coming from with VOIP.
Email address: Free email addresses are easy to obtain and hard to trace. However, by using forensic tools, merchants can know whether it carries any form of risk.
Multiple card numbers: If an initial card is rejected and another is provided, it should raise suspicion.
Not local customer: Determine where customers come from by asking them if they are available to visit the agency in person. If they cannot, the risk of fraud increases a couple of notches.
Information of Transaction
Exit cities: When the departure city is not close to the billing address of the cardholder, that is a concern.
International travelling: International travel attracts more risks than domestic travel because there is money involved.
High risk cities: Some cities and travel routes are notorious for a high amount of fraud cases. Fraudsters do not operate alone, whenever red flags are spotted, check where it is coming from.
Last minute travel: A date of departure very close to when a ticket is purchased should catch attention. However, fraudsters are now smarter with this and can purchase tickets weeks and months ahead, only to call to change it to a different ticket for immediate departure.
Fraudsters change their tactics all the time to avoid being caught. This is why a travel merchant should stay on top of all latest trends and be able to recognize untypical behavior from customers.
Terms & Conditions of Sale Disclosure
Besides fraudulent chargebacks, travel merchant account stores should be prepared to deal with chargebacks where the cardholder claims a refund or a service that was not received.
When a refund or a service related chargeback is received, a merchant is expected to provide proof that the terms and conditions of sale were seen and accepted by the cardholder.
Terms and conditions differ because of how sales are concluded.
But the manner of the transaction does not really matter. What matters is to always provide a clear and crisp disclosure of the terms of agreement upon a purchase.
These are the best ways to get this crucial point across:
Online: Include a “click to accept” button of the terms and conditions. Let the email also have a brief list of all relevant terms with an online check box.
Phone: Read the terms and conditions over the phone and have customers admit that they understand. Keep this recording with a transcript in case a dispute arises.
Face meeting: Place a written disclosure of the terms and conditions in front of the customer. Let the client read the document and sign it. Keep a copy for future reference.
Last Words for your Travel Merchant Account Store
The best way to minimize risks linked to card acceptance is for a travel merchant account store to know the customer. Travel merchants that have physical meetings with their customers are in a better position to curb chargebacks and fraud.
Keep in mind that as anti-fraud prevention tools become more effective, fraudsters are seeking new ways to beat the system.
This is why it is vital for travel merchant account stores to remain eagle-eyed and be on the lookout for abnormal customer behavior.
Let SecureGlobaly’s team of professional’s guide you down the best path towards approval. Once approved, they can also help you dial in the proper payment gateway and fraud settings to keep your online travel business running smoothly, without any interruptions of service. SecureGlobalPay – Payment processing solutions that make sense!