The travel industry is one of the largest industries in the world, accounting for 10.3% of the global GDP and employing over 300 million people. The travel industry’s largest market is eCommerce, with the transaction value reaching over $7 trillion in 2024.
While the industry is quite diverse, it mainly consists of transportation, hospitality, and tourism services. However, because of how broad the category of being a “travel industry” business is and due to the unpredictable nature of travel these days, it’s pretty difficult to operate a travel business. Even worse—it’s difficult to access proper merchant account and payment gateway solutions.
In 2024, for example, we’re seeing more problems for travel merchants than ever before since the industry has witnessed expeditious growth post-pandemic. Despite the growth (or perhaps because of it), unforeseen airline delays, abrupt cancellations, and other unpredictable elements that require micro-managing are what make this field high-risk.
The solution if you want to succeed? You’ll need reliable transaction processing solutions. The lack of security, diversity, flexibility, and compliance can lead to notable losses if you’re not working with the right provider. Fortunately, a dedicated travel merchant account can help avoid significant forfeitures and prevent other daily struggles of merchants in this industry.
What Makes Travel Businesses Inherently ‘High-Risk?’
Essentially, the varying uncertainties of travel make the industry so high-risk.
Unavoidable issues are bound to happen, and travel merchants must be able to deal with these issues to stay afloat. These challenges are also reflected in the payment processing side of the businesses, which stem from customers paying in installments, frequent chargeback claims, and the lack of payment infrastructure.
For example, in the first half of 2020, airlines had to cancel almost 60%, 1.5 million, of all flights due to the global pandemic, resulting in 5.4 billion euros in losses for the aviation industry. Those kinds of issues amplify the need for sturdy and dependable transaction processing solutions.
But before exploring those, let’s dive deeper into the common issues to see if you relate to a few (or all).
Recurring Payment Default (or Buy Now, Pay Later PNPL)
Nowadays, travelers can pay for big purchases, such as expensive cruises or all-inclusive packages, in installments. This is a part of the reason why the travel industry is so large today, as it’s more accessible to everyone.
This works due to BNPL, a system used in payment services that allows customers to make a purchase and pay for it over time, essentially loaning them the money. While that’s great for travelers, missed payments caused by insufficient funds may lead to payment defaults, which legally allow the lender to close the borrower’s account if they’ve decided to admit defeat and cut their losses.
Although this is a great system for consumers, in theory, it can open up businesses to the potential for a lot more disputes. These disputes could be the result of buyer’s guilt, services not meeting the customer’s expectations, or simply a change of plans.
Since the payments are made in advance and the purchases are often high in value, customers have more time to ponder the decision. On average, the chargeback rate in the travel industry ranges from 0.89-2%.
Frequent Chargeback Claims
Travel businesses are prohibited from misrepresenting or over-exaggerating a travel service by using misleading images and over-the-top claims. This is why there are also a lot of regulations for travel advertising to ensure businesses are meeting the customer’s expectations.
As many travelers take advantage of the BNPL option, dissatisfaction or a poor experience are easy to come by. A customer might forget about their trip if they’ve booked it months in advance or feel upset about money being deducted from their account unannounced, for example.
These unavoidable situations could result in a high level of chargebacks. This is especially concerning for travel business owners, as the customer has the upper hand here—they’re only asked to loosely demonstrate the way a travel agent misrepresented a service, without needing to prove it, per se.
Lack of Payment Infrastructure
Many businesses in the travel industry are smaller start-ups that might lack the needed support to deal with transaction processing issues. This lack of support often leads to unsatisfied customers when their transactions aren’t being processed immediately.
In such cases, they tend to turn to their card company directly for a refund and initiate chargebacks instead of trying to resolve the issue with the service provider. Third-party reseller sites are the most exposed to chargebacks in situations like this, as they only handle the money being exchanged.
So, in the case of a canceled flight, it’s the third-party site’s duty to deal with disputes and consequences, which is why a qualified travel merchant account is non-negotiable.
Understanding SIC, NAICS & MCC Codes in Travel Payment Processing
SIC (Standard Industrial Classification), NAICS (North American Industry Classification System), and MCC (Merchant Category Code) are important parts of merchant accounts, card processing, identification, and categorization by industry.
Some of the most common SIC codes in the travel industry include:
472402 for travel agencies
472403 for travel consultants
472407 for destination management
472404 for ticket agencies
NAIC:
561510 for travel agencies
MCC:
4722 for travel agencies
These codes are also used to verify compliance with standards and regulations worldwide. For merchant accounts of all kinds, these codes also impact the applied transaction fees and risk evaluation.
Improper use and misunderstanding of the codes can lead to fines, reserved funds, or the closing of an account completely. Thus, it’s crucial for merchants in the travel industry to ensure they’re being classified correctly and in compliance with the regulations.
What to Look for When Choosing The Best Credit Card Processing Solutions for Travel Businesses
Simply picking any payment processing solution for your travel business just to be able to quickly start processing wouldn’t do you any favors in the long run. Instead, you need to take into consideration the risks, security concerns, dynamic regulations, region-specific factors, and diverse target markets at hand.
To make choosing the right solution provider easier for you, we’ve taken a look into some of the must-haves to keep in mind for a sustainable and efficient transaction processing experience as you start to compare the best credit card processing solutions for travel businesses.
Security Features
Advanced security tools and fraud prevention methods are necessary to avoid fraud, prevent excessive chargebacks, and handle sensitive data.
Processing providers that use modern tools, including AI and machine learning, behavioral analytics, and elastic order linking, can identify and address fraud in real-time.
This can also improve customer satisfaction by ensuring their data and high volumes of transactions are being handled carefully while also minimizing financial losses for the business itself.
Multi-Currency and International Transaction Support
Travel businesses, more often than not, cater to global customers. This means that the service provider has to be able to support multiple currencies and offer a wide selection of payment methods.
By offering convenient payment methods to customers worldwide and calculating the exchange rate for the customer, travel establishments can ensure smoother transactions, enhanced customer loyalty, and a wider clientele.
Integration Capabilities
To streamline the operations of payment processing, it’s important to pick a travel agency merchant account provider whose tools can easily integrate with your existing booking software and systems.
A merchant account that’s integrated into another system seamlessly can potentially reduce manual work like data entries and automate payment processes with the help of AI-driven tools. A smooth integration like this can boost productivity as well as operational efficiency.
Transparent Pricing and Fees
Every provider has their own promises, and it’s a struggle to distinguish the good from the bad. That’s why it’s important to look for a clear and competitive pricing structure. There are many cheap service providers on the market, but they often can’t live up to the expectations and might even be hiding significant fees.
That’s why, as a travel merchant, you have to be okay with paying a bit more to make sure you’re getting what you’re paying for, as the fees will reflect the additional risk.
Customer Support
A reliable customer support team is often underrated when it comes to payment processing. In reality, it couldn’t be more important to the success of your business in the long term.
Quick and knowledgeable customer support is the secret to addressing issues head-on and promptly, ensuring smooth transaction processing. At PayFasto, for example, our customers love that we take pride in the quality and timely support we offer to our merchants.
As travel establishments and other high-risk businesses often operate beyond regular business hours, we’ve made it a point to be available to solve any issue, no matter the time of the day.
Travel Merchant Account Solutions
Merchant account providers and transaction processors who specialize in travel and high-risk businesses overall can offer efficient solutions to the daily struggles merchants in these industries face. The features offered include a variety of alternative payment methods, risk mitigation strategies, operational streamlining, fraud prevention, and other helpful tools tailor-made for high-risk businesses.
Alternative Payment Methods
Offering your customers different payment options can help you reach new customers and reduce reliance on traditional credit cards. However, the downside can be increased risks, as alternative methods may not offer the same level of security or acceptance as classic credit cards.
So, while theoretically offering alternative payment methods to your customers can improve customer satisfaction, it can also complicate other aspects of your business. Hence, a dedicated travel merchant account is your best bet here.
Risk Mitigation Strategies
It’s inevitable, honestly. Chargebacks and disputes are bound to happen in an industry like travel, but it’s important to minimize and prevent the risks and effects of those as much as possible.
This is why implementing strategies along with modern tools that surpass human capabilities in these cases is so crucial. It’s also important to set clear refund policies to make your life easier and manage the expectations of your customers. That way, you’ll be able to resolve claims and disputes more efficiently.
PayFasto: A Tailored Solution for the Travel Industry
PayFasto is an experienced travel merchant account provider that specializes in all things high-risk!
We offer a comprehensive all-in-one package of tools and services tailored for merchants in high-risk industries and we welcome businesses in all segments of travel to apply.
Our priority is to keep up with the dynamic environment of regulations in high-risk trades and offer our merchants support every step of the way.
Our all-inclusive credit card processing services for travel businesses include the following (and more).
Credit card processing for travel agencies
At PayFasto, we offer a wide variety of high-risk credit card providers that can offer unlimited access to multi-bank and offshore processing services.
Multicurrency payment processing
We understand that when it comes to travel businesses, convenience in payment processing is key.
When travelers visit your website, multi-currency payment processing keeps the focus on making the process rather than the exchange rate.
Travel payment gateway
Our aim isn’t just to offer merchant accounts; our aim is to offer as many additional services as possible to make our merchants’ lives easier.
We also provide acquiring, banking, API integration, fraud prevention tools, and much more to the businesses we work with.
For example, after setting up a merchant account with us, you’ll have the ability to customize the fraud filters to match your business’s specific needs.
Multiple payment options
We also offer a wide range of alternative payment methods to make transaction processing convenient for our merchants and their clients.
Our travel merchant account can be used for all different payment channels, such as e-commerce, mail and phone orders (MOTO), and retail locations. Essentially, we make it a lot easier for travel businesses to increase sales with no additional work.
PCI-DSS Level 1 payment gateway
A payment gateway ensures compliance with regulations of holding sensitive data, such as credit card information or IBAN numbers.
Working with a PCI DSS level 1 payment gateway guarantees that you are not limited by transaction limits and that the sensitive data you’re handling is being handled with care.
Travel industry knowledge
The curated knowledge of industry experts at Payfasto ensures smooth transactions, quick thinking, problem-solving, and clever round-the-clock guidance.
Our experience, combined with an up-to-date grasp of the struggles and changes of the industry, assures seamless operations and modern solutions.
PayFasto Offers More Than Travel Agency Merchant Accounts
Dennis Pedersen, CEO of PayFasto, says it’s not all about payment processing-specific solutions, though:
"A lot of travel businesses don't have the right insurance to ensure their business is able to stay afloat when faced with industry changes, regulatory issues, or payment challenges." He added, "They need solutions to ensure one negative thing doesn't affect the entire chain of service providers."
Businesses in all sub-categories of travel who are looking for reliable solutions are invited to apply via our extensive network of acquiring banks. We have helped merchants in all areas of travel, from tour operators, airlines, and travel agencies to authorized ESTA carriers.
Explore Merchant Services for Travel Agencies & Other Travel Businesses
At the end of the day, travel merchants in all sectors face complex challenges daily and will continue to do so due to the endless changes in regulatory standards and varying requirements all around the world. Hence, partnering up with a qualified solution provider like PayFasto is crucial to the success of your mission.
For payment gateway solutions from a provider who understands the travel industry, get a free, no-obligation quote for a travel merchant account here. Whether you’re a travel agency or other tourism provider, we’ll review your business information and get back to you ASAP.
