Travel Merchant Account

A tourist making online travel purchases, something that requires businesses to have a travel merchant account.

Travel merchants often rely on payment processing solutions and services to drive business. After all, the U.S. travel and tourism industry represented USD $580.7 billion in sales in 2019, while global travel and tourism was worth USD $2.9 trillion, according to

Credit card processing solutions are a must for any travel agency. Vacations, and the cost of flights and hotels, are expensive. In the travel industry, merchant accounts are essential because credit card payments are often accepted remotely. Consumers often pay by phone or online.

The travel industry is competitive. It’s therefore important to accept credit cards. There are merchant services for brick-and-mortar and online travel agencies, independent travel agents, tour operators, cruise lines, hotels, airlines, charters, timeshares, car rentals, travel clubs, and online travel reservation websites.

What Is a Travel Merchant Account?

A travel merchant account allows merchants to accept any type of transaction, whether by credit, debit, eCheck/ACH, or gift card. If your business has a storefront, credit card terminals or Point-of-Sale (POS) machines may be used. For a business that operates solely online, the service may include a payment gateway or virtual terminal.

A variety of fees may apply to a merchant account. Merchant services for travel agencies, for example, can include monthly fees, transaction fees, discount fees, chargeback fees, and others.

Fees are charged with each transaction. The fee amount depends on the number of sales the merchant processes. Higher volume merchants can often negotiate lower fees. Since payment authorizations and refunds are considered transactions, agreed-upon fees apply here as well.

Why Are Travel Merchants Considered High Risk?

Billions of dollars in fraud and chargebacks are lost in the travel industry every year. Travel credit card processing is thus considered high risk by many banks. Some of the most important risk factors include:

  • Tickets Are Expensive: Travel is inherently expensive, and average ticket prices for all types are high. This includes hotel bookings as well as tickets for tours, flights, and other travel itinerary items. Travel merchants are generally considered luxury retailers. Typical retailers sell low-cost inventory, which puts many of them farther down in the risk category.

Travel is often not need-based. Many travelers realize their bookings are more than they can afford, so they seek to charge back transactions. This is known as “friendly fraud”; the consumer doesn’t intend to defraud the merchant, but a high number of chargebacks can increase fees and affect the retailer’s credit rating.

  • Chargebacks Are Common: Any merchant’s goal is to have a low chargeback ratio. The higher the ratio, the greater the risk to a credit card processor or acquiring bank of financial loss. If your business has a high chargeback ratio, the processor may face financial penalties.

The highest-risk merchant accounts are often terminated. While high-risk merchants can try to keep sales volume high and chargebacks low, travel merchants are often limited to a certain number of monthly transactions, at which point they can no longer accept credit card transactions. This can prevent your business from operating.

However, a business with a low chargeback ratio (preferably below 2%), and which can prove its bills are paid, can often request higher processing volumes in a few months. It also helps to have a system to reduce credit card transaction disputes. This can be done via customer support, explicitly stating your refund policy and including as much detail as possible in email confirmations.

  • Orders/Purchases Are Often Made in Advance: Consumers usually make travel reservations months in advance. Travel plans can be canceled due to buyer’s remorse or inclement weather, changes in plans, or personal emergencies. It’s not uncommon for consumers to file a chargeback claim to reverse their purchase. The longer the time to order fulfillment, the more opportunities a consumer has to change their mind; when they do, it is almost always at the expense of your business.

When claiming a chargeback, a customer often states the service is not what they realized or what was advertised. They may also look for loopholes in payment terms and conditions. That’s why you can try to avoid chargebacks by openly communicating your return policies. The buyer can then choose whether to go forward with the purchase before making a payment.

  • There Are Cash Flow Fluctuations: The travel business generally sees high demand across the board, but revenue does tend to be unpredictable. Seasonal fluctuations in demand and availability of disposable income impact consumers’ willingness to travel.

The many moving parts of the travel industry play a role as well. For example, a travel agency must work with hotels, airlines, tour companies, rental businesses, and others. The performance of all contributes to sales and cash flow.

Competition is also a factor. In travel, start-ups compete with well-established agencies every day. Merchant services must adapt to this, whether it requires adjusting transaction caps or freezing an account during the off-season.

Could you adapt as well and avoid chargebacks? Your travel business could issue refunds; this can reduce the risk of chargebacks, or you can work with a dispute management service to fight back when they do happen.

Benefits of a Travel Merchant Account

A happy traveller making purchases with an online travel agency payment processing service.

To keep your merchant account in good standing, it’s best to have a plan to prevent fraud and chargebacks and present it to payment processors. It also helps to have a financial failure insurance plan.

When you’re looking to set up an account, you’ll want one with low rates and fast approvals, which can help increase revenue and profits while decreasing overall costs. Also look for a service that accepts all travel merchants, for both domestic and international accounts. Having multiple travel merchant accounts on a single gateway boosts productivity and efficiency, while multi-currency payments eliminates concerns over currency conversion. At Adept Payments, we accept payments in most of the world’s major currencies.

Why Adept Payments?

Whether you require in-store or online travel agency payment processing, we offer the lowest rates and support small businesses. We provide robust payment systems that integrate with most e-commerce platforms. Choose from the latest in-store POS systems or iOS or Android compatible payment solutions. To learn more about how we streamline your payment process, and about our transparent pricing, cash discount program, and application process, contact us online or call 888-732-3838 today.