Payment Processing for Travel Industry Businesses

Payment processing for travel industry businesses is more complex than standard ecommerce because there are more moving parts that introduce risk at each step. High-value bookings are paired with long payment-to-fulfillment gaps, increasing the risk of chargebacks, payment declines, and fraud.

Cross-border customers mean multi-currency payments and more thorough fraud monitoring. Additionally, merchants must manage supplier payouts, refunds, and chargeback disputes.

This article provides a broad overview of the travel payments stack, including the realities of accepting payments for travel purchases.

What Does Payment Processing for Travel Businesses Involve?

There are two broad parts of travel agency processing. The first is accepting customer payments through checkout interfaces, gateways, and processors. Next, merchants must move funds to suppliers, partners, and vendors once bookings are approved and processed. These are typically held in a merchant account until the transaction is completed in case of sudden cancellations, itinerary changes, or other contingencies.

This long fulfillment period increases cash flow challenges and potential risk, which is why not every payment processor will work with travel agents.

Why Is Travel Payment Processing Considered High Risk?

The travel sector is categorized as high-risk because of the numerous payment processing challenges that can result in cash flow issues, fraud, or chargebacks. Some of these include the following.

• Delayed Fulfillment: There are often long lead times between booking a trip and traveling. During this time, the customer's card number may change, or they may dispute a charge because they chose to cancel.
• High Average Transaction Values: A cruise or all-inclusive resort package can cost thousands of dollars, making a secure payment system crucial to preventing revenue loss. This is especially true with online payment services, which are highly vulnerable to fraud.
• Cancellations and Itinerary Changes: Customers may have to cancel or rearrange their travel plans, which requires additional management and agile payment processing.
• Chargeback Exposure: Customer expectations are often high for travel bookings, and they may dispute charges if a portion of the trip did not meet their standards. Other issues with chargebacks include confusion about preauthorizations vs. full captures and disputes about non-refundable deposits.
• Cross-Border Bookings: International transactions require multi-currency payment processing and may increase the risk of fraud, as some fraud prevention methods are regional rather than international.
• Multi-Party Fulfillment: Payment processing for the travel industry requires managing payments for vendors, suppliers, contractors, and other third parties. For international bookings, this can involve cross-border transactions.

What Should Travel Merchants Look for in a Payment Processor?

A luxurious island hotel and someone arriving with luggage

Credit: Adaptiv Payments

The right payment processing solution should be flexible, scalable, and secure, with tools tailored for the travel industry. These are some of the factors you should consider when comparing different payment solutions.

Multiple Currencies Support

The benefits of multi-currency payment solutions include the following:

• Expanding Customer Base: Customers are more likely to abandon their cart if they can't pay in their local currency or have to perform conversions before payment. In some cases, customers won't trust a company that doesn't allow them to pay in their preferred currency, as they worry they will get a subpar experience.
• Improving Customer Experience: If the platform only accepts US dollars, customers may experience sticker shock when they realize how much more expensive it is in their own currency. Having that information available upfront allows for a more seamless transaction.
• Paying Suppliers: Paying suppliers with local payment methods builds trust while also reducing your fee burden across the board.

Being able to hold wallets in different currencies also reduces your overhead, as you will not need to repeatedly exchange currency for each transaction.

Cross-Border Capability

An international merchant account enables your travel business to accept payments from multiple markets, improving your reach and customer satisfaction. These payment processors have relationships with local acquiring banks, enabling faster, smoother transactions.

Variety of Payment Methods, Including Bank Account Transfers, Credit and Debit Cards

Offering multiple payment methods reduces cart abandonment and enhances trust. Ensure that the processor supports debit and credit card payments, ACH or wire bank transfers, and digital wallets like Apple Pay or Google Pay. Users should be able to add new payment methods, save their details, or change their payment method if necessary.

In addition to different payment options, users also want to choose different payment structures, like lump sum, deposit, or installments. Ensure your travel payment processing works with these structures.

Strong Authorization Performance

Visa, Mastercard, and other issuers must authorize payments, and they are less likely to do so from untrustworthy processors. Declined authorization can significantly impair your cash flow while damaging relationships with your vendors and customers. Ask the processor how often they receive denials.

Fraud Controls

Fraud is unfortunately a common issue in the travel industry due to card-not-present transactions and friendly fraud, in which customers dispute legitimate charges because of financial difficulties or because they forgot they made a booking.

However, not every payment processor's existing systems are refined enough to accurately assess fraud, especially for international payments. This is why you need a specialized processor that uses behavioral analysis to identify potentially fraudulent transactions before they are authorized.

Strong fraud controls should include real-time monitoring and step-up challenges that reduce friction for legitimate transactions without letting fraudulent payments move through.

Chargeback Tools

Reducing chargebacks in travel payments is critical. Chargebacks are high in the travel industry due to a delayed fulfillment model, customers' high expectations for their travel experience, and multiple vendors processing transactions, sometimes under different brand names.

While some aspects of chargeback prevention come down to operational decisions, like avoiding hidden fees and proactively communicating with customers, other parts require specialized travel industry chargeback protection.

Critical aspects of chargeback prevention include dispute resolution tools, real-time monitoring, and consultants who can address any issues that may be resulting in high chargeback rates.

Reliable Gateway Performance

The difference between a merchant account and a payment gateway is that the payment gateway secures and encrypts the customer's payment information, while a merchant account holds the funds until they are transferred to the company's bank account.

Secure digital payment gateways are crucial for preventing data breaches and maintaining compliance with data security standards. Because many financial institutions don't work with travel businesses, you may need a high-risk payment gateway.

Routing Flexibility Where Needed

Payment flexibility is crucial for international travel, helping to reduce transaction fees and boosting approval rates. The routing system will determine which local institution has the lowest processing fees for different currencies and choose the one most likely to be approved.

Real-Time Reporting and Reconciliation

Real-time reporting lets you assess your current profit margins without waiting weeks or months to reconcile accounts. This is also crucial for dispute management, as it allows you to promptly resolve any complaints before they escalate into a chargeback.

A rich data flow can provide more refined insights into common payment choices, typical customer journeys, and which value-added services are most popular for different customer profiles. With this transaction, you can make more informed decisions about your business model and improve customer satisfaction.

Scalability for Busy Travel Periods

The travel sector is highly seasonal, so your payment processor must handle transaction spikes without limiting accounts or throttling access. High-volume merchant accounts can intelligently route payments, process transactions efficiently at peak seasons, and assess whether volume spikes are fraudulent or legitimate.

Adaptiv Payments

Adaptiv Payments is a leading provider of merchant accounts for travel industry businesses. Rather than an automated underwriting process, our team comprehensively reviews your business profile and adjusts risk assessments based on our deep knowledge of the travel sector. We'll work with you to assess your specific needs and develop a comprehensive processing solution that suits your business model.

We offer an integrated merchant account, payment gateway, and payment processor, an all-in-one solution that allows seamless integration with your current systems and workflows. Using PCI-DSS-compliant security measures keeps your customer data safe at every step of the process. With real-time fraud alerts and chargeback mitigation, you can stay on top of potentially fraudulent activity and intervene in customer complaints before they become chargebacks.

Most importantly for travel companies, we offer multi-currency support, working with banks worldwide to ensure uninterrupted processing. Build trust with customers and vendors by offering local currency options, and hold a range of currencies to reduce your fees.

We know your travel company is unique, which is why you need specialized payment processing options. Contact us today for a free quote and learn why thousands of high-risk merchants trust Adaptiv Payments with their processing needs.

FAQs