When making a list of merchants with the highest risks regarding credit card processing, travel agencies shouldn’t be left out. To begin with are the poor statistics that prove travel agency customers are prone to chargeback disputes and claims than others. For that reason, travel agencies are listed in the same group of high-risk companies such as adult merchants, escorts, fortune tellers, companion services and odds making.
As a result of this policy, new travel agencies today find it tough to create a merchant account, since most processors are willing to work only with dealers who have experience in credit card processing. This step is to ensure that the candidate can manage risks satisfactorily to sort out customer claims and keep chargebacks within reasonable limits. Well-known travel agencies are strictly observed to ensure they remain focused on risk management.
Therefore to mitigate the risks of credit card processing whether you are new to the airline business or have been in the business for years, you should;
Understand your risks
Before you think of applying for an air travel merchant account, worry about understanding the possible agent liability that comes with selling air tickets online. Understanding the level and nature of risk exposure is the first step to minimizing and protecting your agency from losses due to chargebacks from client claims and fraudulent transactions.
Set up card acceptance procedures
To mitigate risks if a customer files a dispute, or if a client uses a fraudulent card, you will need to come up with card acceptance procedures and policies to avoid the following.
Though an authorization request approved by the card issuer shows that a credit card account is valid, this approval is neither enough proof that the legal cardholder is behind the purchase nor a guarantee of payment. In most cases, airlines are left to account for fraudulent “card-not-present” transactions, even in instances where the issuer approved the card in question.
While your travel agency may not necessarily be a Visa or MasterCard merchant, the airline is a MasterCard and Visa merchant and therefore subject to the Credit Card Associations’ rules. Be warned that the airline will transfer financial accountability to your travel agency in most fraudulent transactions as stated in the contract.
When choosing a payment processor, ensure you select one with knowledge in dealing with travel agencies. Your selected processor should assist you in setting up and implementing fraud prevention measures. Also, they should be proactive in noticing and pointing out potential points of weakness in your credit card processing cycle.