With the opening of borders between countries after the turbulent effects of the COVID-19 pandemic, the travel industry is picking up and regaining its momentum in competitive efforts to gain recovery. Credit card processing solutions are almost mandatory for every travel agency and business to drive sales even further – considering that cost of flights, accommodations, products, and services are relatively higher than pre-pandemic levels.
A travel merchant account is essential because credit card payments are widely accepted and it can be done remotely, using mobile phones, devices, and other digital services. This is especially so for foreign tourists who make bookings and reservations way in advance and rely on credit card processing solutions for a smoother transaction.
What Is A Travel Merchant Account?
A travel merchant account is basically an account that allows merchants like yourself to accept almost any kind of transaction, be it through credit card, debit card, or gift cards.
For businesses with a physical store or outlet, credit card terminals or Point-of-Sale (POS) machines are usually used during the transaction process with your customers. For online businesses that operate remotely, a payment gateway or virtual terminal is usually used to ease the transaction process.
However, fees may be incurred and chargeable to a merchant account. For example, travel agencies may incur charges such as transaction fees and chargeback fees which are charged with each transaction.
Benefits of A Travel Merchant Account
When setting up an account, do keep a lookout for one with low rates and quick approvals so your business can profit more while reducing overall costs.
A service with different travel merchant accounts that cater to both domestic and international accounts will be helpful in expanding your business’ reach to boost efficiency and drive productivity levels. In addition, allowing for multi-currency payments will automatically eliminate any kinds of concerns regarding currency conversion for your customers. This can help travel agencies expand their business footprint beyond their own countries.
Risks of A Travel Merchant Account
Travel credit card processing is considered high risk when it comes to fraud and chargebacks in the travel industry. Many banks have noted that billions of dollars are lost in the travel industry annually, which is quite a large amount.
Most of the time, tourists reserve or make their bookings way in advance but can cancel their plans when unforeseen circumstances arise, be it due to personal emergencies or a change of plans. When this happens, tourists often file a chargeback claim supported by reasons that incur credit card chargebacks and they will be at the expense of your business.
Another potential risk is that the revenue gained by the tourism industry, in general, is unpredictable and fluid. Just take the COVID-19 pandemic for example – economic downturn, closure of borders, unemployment, and hence impacted disposable income are all factors that will alter consumers’ willingness to travel. Being adaptable to situational environments is thus important or your business will incur losses in the long run.