Travel

Why Travel businesses are considered High-Risk?

Factors contributing to Travel merchants being high-risk when selling online:

Chargebacks:

    • Long lead time between booking and travel
    • Cancellations or changes in plans are common
    • High value of transactions
    • Numerous factors that can impact a customer’s ability to take their trip as planned

Fraud:

    • Criminals using stolen credit cards to purchase travel packages or book hotel reservations
    • The global nature of the travel industry means that merchants may be exposed to fraudulent transactions from all around the world

Business characteristics:

    • Seasonal fluctuations: The travel industry is subject to seasonal fluctuations, which can lead to unpredictable revenue streams
    • Limited transaction history: New travel businesses or those with limited transaction histories may be viewed as higher risk by payment processors
    • Complex pricing structures: Travel merchants may offer complex pricing structures with multiple fees, taxes, and other charges. 
    • High-volume transactions: Due to the high value of travel purchases, merchants may need to process a high volume of transactions to maintain revenue levels
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Mitigation measures for travel merchants to reduce risks when selling online

Security protocols:

    • Implement strict security protocols
    • Require additional verification steps for high-risk transactions
    • Closely monitor chargeback ratios

Fraud prevention measures:

    • Use advanced fraud detection tools
    • Analyze customer behavior to detect suspicious activity
    • Verify customers’ identities and contact information

Payment processing:

    • Use a reputable payment gateway provider
    • Implement fraud detection and prevention tools provided by the payment gateway
    • Use a chargeback management system to handle chargebacks efficiently

Being a high-risk merchant vs. a regular merchant

  • Higher payment processing fees
  • Lengthier application process
  • Higher chargeback fees
  • Cash reserve requirments:
    • Capped reserve
    • Rolling reserve
    • Upfrom reserve
  • Volume caps
  • Additional technical requirements
  • Being on the TMF / MATCH list

 

Check out our knowledge hub to learn more about what processing fees, application process, chargebacks and cash reserve requirements or TMF / MATCH list mean. 

Other risk factors?

There may be other risk factors as to why you as a Travel merchant are classified as a high-risk merchant, such as:

  • Accepting subscription-style payments

  • Being on the Member Alert to Control High-Risk Merchants, or MATCH list — a list managed by Mastercard that monitors merchant behavior, like chargeback history

  • High average transaction sizes

  • High sales volumes

  • Highly regulated industries

  • International sales

  • Large number of card-not-present transactions

  • Little to no business experience

  • Long fulfillment time frames

  • New or poor credit scores

  • Past fraud or illegal activity

As high-risk Travel merchant how to find a payment provider?

It takes effort for businesses to secure a payment processing partner when they are considered high-risk but it is definetly possible to find the right payment solution if you focus on:

  • Maintaining healthy cash levels. Most processors would like to see a healthy cash level in your business bank account. 
  • Try to reduce chargebacks. There could be a number of factors behind the soaring number of chargebacks in your business. Whatever the reasons may be, you can always analyze them and try to reduce your chargebacks.
  • Be transparent. Disclose all materials and relevant information during the application process. Payment processors may ask you for very detailed information about your business and finances. Be open, honest, and transparent.
  • Keep your documents ready. This could mean having six months of bank statements and a few years of tax returns. That said, each processor has its own set of requirements so make sure to check them.
  • Follow the guidelines of your payment processor. When you apply for a high-risk payment solution, besides your business needs, the risk the payment solutions provider takes also matters. So, be flexible and see if there are things you can do to reduce your risk by discussing with them and following their recommendations.

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We provide payment solutions for merchants with a 90% Succes Rate by Algoritmic matching and pre-KYC onboarding in each industry and region globally.

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