The concept of travel is as old as time. Humans have always wanted to go beyond their surroundings and explore new horizons. As the purchasing power of the average consumer increases in the age of globalization, more and more people are willing to spend a huge chunk of their savings to go on holidays or vacations to another part of the world.
The travel industry has benefited significantly from these trends. In 2019, the market size of the travel industry stood at 1.9 trillion US dollars. However, the industry faced major setbacks in 2020 due to Covid-19 which resulted in the market share of the industry being reduced to 1.09 trillion US dollars in that year. This was a whopping decline of 41%! With restrictions and lockdowns being eased across the globe in 2021, the market share improved by 20% and stood at 1.3 trillion dollars.
Covid-19 showed us that travel is a high-risk industry. Change in global circumstances can impact businesses, consumers and also the financial institutions that support them.
We, at CutPay, can offer merchant accounts to travel businesses to cater to the needs of their customers.
Types of travel merchants accepted by CutPay
- Air BnB
- Bed and Breakfast
- Business Travel Planning and Reservations
- Car Rentals
- Cargo Travel Services and Agencies
- Charters & tour operators
- Consortium Travel Services and Agencies, etc.
- Cruise & River Tours
- Destination Management Companies
- Familiarization tours
- Fully independent traveller
- Hotels/motels/other lodging
- Membership and Travel Club Programs
- Open Travel Alliance
- Receptive tour operators (RTOs)
- Regional destination marketing organization
- Sightseeing Merchant Account Services
- Ticket sales
- Timeshare sellers/resellers
- Tourism services
- Transportation Services
- Travel agencies & independent travel agents
- Travel Clubs
- Travel Ecommerce Sites
- Travel eCommerce websites
- Travel Membership Clubs
- Travel reservation services
- Travel-related clubs and membership programs
- Vacation packages/discount offerings
- Vacation Rentals
- Visitor Centers
Why the online ticketing industry is considered high-risk?
As discussed above, changes in circumstances can impact businesses, consumers and also the banks associated with them. Financial institutions are sceptical of working with high-risk businesses since such alliances could lead to lost sales and reduced bottom line.
Some factors that contribute to the travel industry being classified as high-risk are given below:
1. High-value ticket items
The average value of a transaction in the travel industry is usually high. Costs associated with tickets, accommodations, tours and other travel services can add up and contribute to the overall risk for the bank. High-value items have the risk of becoming liabilities. Further, these expensive services or products are a source of attraction for scammers and cybercriminals.
Travel is a ‘future fulfilment’ industry. This means there is a time lag between when the service/product is paid for and when it is actually rendered. A lot can happen during this period which may cause the customer to change their mind about the purchase and prompt them to ask for a refund from the travel business or chargeback from the bank.
This request for a chargeback could be due to a number of reasons.
- Personal emergencies
- Travel plan cancellations by the customer
- Vendors or service providers like hotels, restaurants, tour groups, entertainment venues, etc.) go out of business
- Unforeseen circumstances: hurricanes, wildfires or Covid-10
Some chargebacks may be claimed even after the service has been delivered.
One reason for claiming a chargeback later could be buyer’s remorse. The customer might not be satisfied with the services rendered by the travel business. For example, the images on the travel agency’s website might have made the destination look more exotic than it actually was; the hotel room the customer stayed in was not up to the required standard, etc.
Sometimes claiming such a chargeback might not be fair. There will always be people who will try to get something for free. They might be tempted to claim they never utilized the service or even that the transaction on their statement was a fraudulent charge. This type of chargeback request is called ‘friendly fraud’.
Travel payments are also prone to cybercrime. Most individuals make online payments to travel businesses because it is convenient. And since many travel businesses are based off-shore, the only way to pay for their services is via online payment methods. There are numerous cybercriminals hacking bank accounts, skimming credit card information and stealing identities. Important financial information of clients might be compromised online during a CNP transaction.
4. Bankruptcy and business failure
The year 2020 saw a lot of travel businesses shutting down their operations. Airports were closed, flights were cancelled and international travel had halted in the wake of Covid-19.
Even during normal times, travel businesses are at risk of collapse. As stated above, there is a huge lead time between paying for the service and actually availing it.
Most travel purchases are impulse-based and the industry witnesses seasonal variations in demand. Revenues are unpredictable and cashflow fluctuations are inevitable. Most travel businesses pre-sell their packages or tickets months in advance. During this time, travel companies, hotels or entertainment venues might go out of business.
Due to all these reasons, banks classify travel merchants as high-risk businesses.
Why Choose CutPay?
CutPay specializes in processing payments for travel businesses. We are one of the best merchant service providers for travel companies in Europe and the UK.
With our extensive network of various acquiring banks, we can help you diversify the processing of your payments among multiple banks to mitigate risk as well as expand your business globally.
CutPay offers high-risk businesses a host of fraud and chargeback protection features as well as a secure payment gateway that provides travel businesses with long-term, reliable payment processing solutions.
|Industry Account Experts
|Fast Account Approval
|Relationships with Leading Acquiring Banks
|Large Merchant Case Studies
|E-Commerce and Retail Options
|B2B Vendors Supported
|Multiple Payment Solutions
|Multiple E-Commerce Gateway (Mobile apps or website)
|B2B-Level II/III Data Discounts
|3D Secure Frictionless Checkout
|Level 1 PCI-DSS Merchant Gateway
|Support & Guidance
|International Merchant Accounts
|Gateway Recurring Billing
|E-Commerce Cart Plugins
|Developer API /SDK/ Docs
|POS/Terminals (Virtual or MOTO)
|Dedicated Account Managers
|Superior Customer Service
Ready to Get Started?
So are you a travel business that wants to open a high-risk merchant account? Don’t know where to start? Fear not – CutPay is here to solve all your problems!