Travel Merchant Account — How to Choose the Best One
Travelling has become easier than ever due to a high number of low-cost carriers, hotel and apartment booking sites, and global internet access. On the other hand, meeting customers’ expectations is a real challenge for travel companies. But, with the right travel merchant account, you’ll be able to stay ahead of the competition.
The World Tourism Organization reports that international tourist arrivals grew by 6% in 2018 and are expected to grow by 3 to 4% in 2019. This is also driven by an increased appetite for mobile travel apps and other types of convenient solutions.
Stats show that average travel profits are increasing. But, with higher profits come bigger operational costs, which also affect customers, as they pay higher prices for travel. Travel Payments Study 2018 by Amadeus found that companies spent 5.3% of their revenue managing payments.
Operational and processing costs are even more burdensome for smaller travel providers. On average, merchants with less than $15 million annual revenue, report that they spend 7,5% of said revenue on payment processing.
Travel industry as high-risk
The travel industry is labeled high-risk in large part because of the period between the booking date and the service itself, meaning that transactions occur long before the delivery of the service or product. Additionally, an international customer base, as well as high-value transactions, make matters even more complicated — and there you have it.
For context, let’s take a look at Thomas Cook’s bankruptcy case, described by Chargebacks911. This situation impacted about 600k international travelers whose flights were suddenly canceled. At the same time, Thomas Cook wasn’t able to pay refunds, which caused a sudden spike in chargebacks that had to be handled by the company’s acquirer.
This incident also impacts travel companies, who face having to be reviewed by banks’ risk departments — resulting in higher fees and larger reserves on your account.
However, strict contract conditions with high-risk payment processors don’t have to come with only drawbacks. Processing payments through a high-risk merchant account enables merchants to accept an unlimited number of card transactions per month and omit a limit of the maximum amount per transaction.
Moreover, high chargeback protection increases your chances of keeping your merchant account in good shape, and prevents it from being frozen or terminated without notice.
The seasonal nature of the travel sector leads to frequent chargebacks.
Note that most consumers don’t understand the difference between a refund and chargeback — as such, they are more inclined to file a chargeback which they perceive as more convenient than approaching the merchant to ask for a refund. Such a phenomenon leads to creating a culture of zero-liability in payments.
Travel merchant account — security at the forefront
While, according to Phocuswright’s study, 99% of airlines accept credit cards during the booking process, one of the biggest concerns for both travel companies and travelers is fraud. People need to feel confident while they pay, as they share sensitive data.
Travel is one of the industries highly targeted by fraud, so companies need to prevent any suspicious attempts before they turn into serious problems. According to the “Fraud In Travel Payments” research report, fraudulent activity costs travel companies $21 billion and could exceed $25 billion by 2020.
Another thing that the travel industry needs to face are false declines, which are usually caused by merchants whose standards are too strict. As a result, legitimate transactions are flagged and declined.
This is why we recommend using multilevel security, which can be achieved through having a payment gateway optimized for the travel industry. SecurionPay provides a gateway, which is packed with a set of anti-fraud tools, built-in machine learning and AI solutions, and non-invasive 3D Secure, to name a few.
One security tool isn’t enough, even if it’s built with the highest security standards in mind.
Not all machine learning solutions are equally effective, so ask your payment provider for dynamic rules that best suit your industry. Static rules can be inaccurate since customer behavior differs from market to market.
You need anti-fraud tools that adapt to your business model — its complexity and specified requirements.
Travel companies need to balance the processing risk and, without a technology that monitors and assesses for fraud, this might be quite difficult. Not to mention the chargeback fees merchants face as a result of each filed dispute. Plus, excessive chargeback levels may equal threats to business sustainability.
Moreover, you need to find a reliable travel payment processor that follows all of the industry’s laws and regulations. For instance, European travel businesses need to provide Strong Customer Authentication (SCA), which is part of the Second Payment Services Directive (PSD2) that took effect in September 2019. SCA will make payments more secure and, as such, it’s supposed to reduce payment fraud.
Advanced technology and innovation give travel companies the tools and solutions needed to reduce customer frustration and personalize their booking and travel experience.
According to 2018’s Travel Payment Study, 81% of travel companies plan to implement at least one innovative project in the next three years. The same goes for payments — travel companies need to keep up with payment innovations, if they want to survive on the digital-based market.
The study also points out that 80% of travel companies work with between 3-10 different payment providers — something which comes with operational complexity. And, one of the most common reasons for implementing multiple payment options is that offering payment solutions, which are familiar to your customers will keep your conversion on the right track.
Payment systems shouldn’t hinder the company’s conversion. Unfortunately, however, they often do, due to outdated systems, unreliable travel merchant accounts, and poorly-designed checkout processes.
Also, having various payment methods help travel companies reach more customers. The same goes for accepting payments in customers’ local currency. Customers are more likely to complete a purchase when they can choose their preferred payment method and pay in the currency they are familiar with. Plus, it can save thousands of dollars in processing costs.
Travelers expect convenience and flexibility at every step of their booking process — something which can be made possible with solutions that give companies full control over booking and payment systems so that they can simply adjust the technology to their needs.
Integrating a booking system with a payment gateway for the travel industry enables businesses to authorize transactions or save credit card data to process it at checkout or when a guest doesn’t show up.
A growing number of modern payment gateways for travel businesses combined with AI-based solutions help to personalize offers, which enhances the experience and improves customer satisfaction.
The importance of user experience
One of the most important rules that should be followed by each and every business is that price is important, but the experience is what impacts the final decision on whether to book the next trip.
While travel websites face the highest abandonment rates, it’s in their interest to implement processes and solutions that enhance user experience and encourage people not to leave the page without booking. Many depend on the page load speed, website navigation, and overall experience, but it’s not only about how the website or an app works, but also about how the payment process is designed.
That being said, travel companies need to implement a simplified checkout and ask for only necessary data. They should consider using autocompleting wherever it’s possible to speed up the process and improve the overall experience. The main goal is to minimize the number of steps to make the process as simple as a few taps. It’s all about how customers feel, so there’s no space for complexity nor a multistep checkout.
What matters when you consider the best payment gateway for a travel website are setup time, technology (make sure that payment flow is smooth and goes without hassle), currency, security level, and transparent pricing.
Meeting mobile travelers’ expectations
The 2018 Digital Transformation Report by Skift and Adobe reports that over 20% of travel companies’ traffic comes from mobile platforms. So, the travel industry needs to target mobile users, as they behave differently, spend less time interacting with content, and expect a smooth and fast experience without distractions and interruptions.
Nowadays, people carry smartphones everywhere and expect to have the opportunity to change their travel plans at any time — time zones or currencies shouldn’t stand in their way. Bear in mind that people want to pay on the go without standing in lines, so mobile presence is a must for travel-related companies.
The global nature of the industry means that accepting customers’ payments in their preferred currency is simply a must. Today’s travelers are tech-savvy and used to cashless transactions — as such, they’re growing to expect convenient multi-currency payment options.
Thankfully, nowadays, it’s much easier to reach more customers thanks to reliable payment gateways tailored to the travel industry.
Subscriptions in the travel industry
Frequent travelers are particularly focused on getting the most value for their money. They use travel apps and booking websites to find deals that best match their preferences and look for less traditional options among services based on the sharing economy.
There is a growing number of travel companies who are planning to provide subscription-based services over the next few years. This isn’t surprising, as the subscription-based model is an opportunity to increase customer retention — and travel is one of the industries with the biggest potential in this regard.
Traveling is not a regular activity for many people, so the subscription-based model needs to come with a price advantage and should be tailored to the needs of frequent travelers.
At times, it can be difficult to attract customers, but many companies can benefit from offering subscriptions for local travel activities, entertainment, car rentals, theme parks, etc.
When properly implemented, recurring card payments give businesses added convenience, regular sales opportunities, and a predictable cash flow. SecurionPay delivers solutions that help travel agencies unlock the potential of recurring card payments without redirections so that you can win over today’s savvy, demanding travelers.
You can set up any scenarios you need and combine various billing models, so that travelers can make subscription and single payments (i.e. for add-ons, upgrades) within the same transaction. The payment platform allows you to easily manage transactions, browse payment history, create charges, or assign customers to certain subscriptions.
Is your travel business futureproof?
Travel companies can scale effectively and provide travelers with an uninterrupted experience thanks to having the right tools and a reliable travel merchant account in place.
Companies in the industry need to remember that the travel experience starts with planning and doesn’t end when the customer’s trip does.
The travel market is a diverse place, so only the companies that respond to its demands and provide truly exceptional and secure traveling experiences will charge ahead. And, it’s much easier with a travel merchant account that offers flexibility and a travel payment processor that understands the industry’s unique challenges.
Latest posts by Sandra Wróbel-Konior (see all)
- A Segregated Account: What It Is and Why You May Need One - July 1, 2020
- An Overview of Visa Purchase Return Authorization - June 16, 2020
- Subscription Merchant Account—Keep Your Business on Track - May 21, 2020