- January 16, 2020
- Posted by: admin
- Category: Travel Agency Merchant Accounts
Who are travel merchants?
A merchant, who provides travel and tourism-related services to the general public on behalf of suppliers, is known as a travel merchant/travel agency merchant. Outdoor recreation activities like airlines, car rentals, cruise lines, railways, package tours, hotels, etc.are provided by travel agency merchants. In the coming year according to stats available it is believed that this industry will reach up to 29.3 billion U.S. dollars! Without any surprise, the travel industry is the second-fastest-growing sector in the world! When a travel agency wants to start accepting payment via credit/debit card online it has to apply for a merchant account. Because of the nature of the travel agency industry, it is labeled high risk by most of the financial institutions and merchant account providers. In this article, we will discuss the requirements to get a travel merchant account which will help travel agency to get easily approved for high-risk merchant account.
Importance of travel merchant account and how it helps
An online account that allows your business to accept payments by debit or credit cards is known as a merchant account. While there are businesses which are at higher risk than others like travel business because of the following reasons:
· The payment is made much before in advance for the services not yet offered by a travel agent. This makes it really risky because if due to any personal reason the customer canceled the trip at the last moment then the travel agent has to bear a great loss as everything is mostly pre-booked.
· This industry not only faces a lot of chargebacks but faces very expensive chargebacks. In the travel industry the services offered are quite expensive, they somewhere at least cost a few hundred dollars. At last, chargebacks become the responsibility of merchant account providers.
· Due to highly prone chargeback business, travel businesses often end up failing. There is a high risk of sudden shut down of the travel agency.
· Travel industry is risky because high transaction volume means a large chance of loss. Even the normal transaction has some risk involved then you can imagine how much financial risk is involved in the travel industry.
· Travel merchant usually deals internationally which adds more risk. If not managed properly then it can cost heavy to both travel agency merchant and merchant account provider.
· Industries that make big transactions overseas are highly prone to fraud. They attract transaction laundering being highly exposed to chargebacks. Merchants that offer expensive services are much more vulnerable to fraud.
High-risk merchant account is mandatory for such businesses, which simply means that the merchant has to face various restrictions and high fees. For high-risk business, it is more difficult to get a traditional merchant account because your business needs extra security and also with you merchant account provider has to take more risk when offering a high-risk merchant account.
What are the requirements to get your travel agency merchant account?
Getting approval for a high-risk travel agency merchant account is not brain surgery, by taking care of few important requirements you can get your travel merchant account smoothly.
- Know your industry well: The foremost requirement is to know the important factors and risks associated with your business type. You should have good knowledge about your industry and how it operates.
- Maintain a healthy credit card history: A healthy credit card history plays an important role. So maintaining a low chargeback ratio is required. A good bank account with a financial clearance of overdraft fees has the best chance of obtaining approval for a merchant account. Usually, at least 3 months credit card processing statement is asked to show the capabilities of the merchant to manage risks and chargebacks. In case your business hasn’t processed credit cards yet, then make sure your cover letter is exemplary.
- Stable your processing volumes: Establishing a good and stable processing volume is another important requirement. Maintaining a stable processing volume will help to demonstrate to account providers that there is a demand for your product. Merchant account providers would not like to invest in your business unless you have a good number of monthly volumes of bank card transactions.
- Business financials: Financial strength of a business tells most of the story about the capable management, ability to handle problems and frauds. A travel agency with strong financials will definitely face fewer difficulties in getting a travel merchant account.
- Get a license and other important documents: Another important requirement is to gather all the important documents. Also before you apply for a high-risk merchant account get your required license. License by the International Air Transport Association (IATA) is required in many countries and for those who issue air tickets, Air Travel Organizer’s Licensing. In the UK, travel agency needs legal documents from The Travel Association (ABTA), whereas, in the US, the American Society of Travel Agents represents travel agencies.
- Set-up an attractive website with a disclaimer and policy: Your business website plays a vital role. Make sure that the checkout is secure and product and delivery options descriptions are clear.
- Don’t get stuck to one payment processor: Never settle with anything less worthy, is a key to success. As a travel agency merchant, you must be well aware of the fact how technology and the market are evolving. So, the correct analysis is required while picking up the merchant account provider. If your current payment solution is not working for your high-risk business then you should look around for better options available like iPayTotal.
- Research and find merchant account providers: Selecting a perfect merchant account provider is also very important. Do proper research and find those merchant account providers available in the market that specializes in high risk merchant accounts. Pick merchant account providers who deal with your business type or in your industry and rates /fees should be under your budget. Here, are the important features you should look while analyzing merchant account provider:
- · Choose a provider with a great track record in getting high-risk businesses to account for approved.
- · Do consider the specific needs of your business for growth.
- · Completely avoid those companies who hide fees in their contracts. The market is full of such companies. You need a trustworthy, honest companion like iPayTotal.
- · High-risk business involved a lot of expenses, so, try to go for a month to month contracts instead of multi-year contracts.
- · Read the contract properly and understand the charges and rates because once you get into the contract then you can’t back off. Only choose a merchant account provider who provides you worth paying services.
- · 24/7 customer services should be provided by your merchant account provider. So, that you can freely discuss your doubts anytime.
- Apply for the account with a cover letter: While filling the application form and completing other formalities, adding a cover letter which will throw a positive light on your strengths and explain your past achievements, is required. Setting up a high-risk merchant account is an easy process but it is important to submit all of the necessary paper asked by the company in order to avoid delays and confusion. Here is the basic list of standard items requested.
- High-risk merchant account application form
- Articles of information
- IRS form SS-4
- Voided check
- Business financial statements
- Processing statements
- Business bank statements
***Documents vary from company to company. ***
- Be transparent and honest: If you want to build a strong understanding with your merchant account provider, be honest as it goes a long way especially when you are a high-risk business. Be completely transparent, tell real facts about finances and exactly what you’re offering to your customers because if a payment processor found anything unusual, they will reject your application or shut down your account.
- Be careful: At last, don’t forget to read the contract carefully which is signed between merchant and payment provider after all the paperwork and verification. After all the formalities you will be ready to receive payment via credit/debit card online and make the travelling experience of your customers better.