The subject of payment processing is one of the most crucial aspects in the travel industry. It is a part of the travel business that needs to be done right to ensure that a variety of payment methods are accepted without any delays or fuss.
Online travel agencies, tour agencies, and other industry players need a reliable way of carrying out payment processing that increases confidence and customer satisfaction. We’ll be considering the different aspects to bear in mind and how to get started safely.
Why is payment processing more complex for travel businesses?
There are several reasons why payment operations are more complex in the travel industry than in other areas. The following are some of the main payment challenges to consider:
High-risk category
Payment processors and banks tend to classify this industry as high risk. It is largely because the payment data is processed weeks or months in advance. If the travel agency encounters problems, the payment processor may be held responsible for issuing a refund.
Advance bookings
As we described in the last point, advance bookings can be a problem. It is because the customer could change their mind before the date. It may lead to something known as friendly fraud, where the person falsely claims the money back.
Cancellations
Cancellations are common in travel booking. They may also be complex, as sometimes only one part is cancelled, or the travel business may offer credits instead of a cash return. It leads to the need for chargeback protection for travel businesses.
Seasonal fluctuations
It is a seasonal type of business where the administrative burden increases at certain times of the year. The rush of payments during peak periods can cause volume issues. It can also lead to fraud alerts at the processing bank if they don’t account for the spike in volume during the busiest periods.
FX and multi-currency transactions
From a business point of view, being able to accept a variety of currencies on international bookings makes sense. To process transactions and multi-currency travel payments effectively, they need instant access to appropriate real-time conversion rates.
Global customer base
The global aspect of online travel sites means that they need to handle cross-border transactions. Customers from different markets expect to be able to pay quickly on a travel website and get a positive customer experience. The travel industry needs to reflect this diversity with cross-border payments.
Open an account
in Genome online
What travel merchants need from a payment processor
The ways that payments are made in the travel industry have expanded. The latest technology is now used to make the payment experience smoother, but there are still major challenges.
The shift of travel booking systems online has driven demand for online payments. It has to be a core part of any payment processing for travel agencies. Here are the key expectations in this industry.
Fraud prevention. We’ve seen that fraud is a potential issue for online travel agencies and other industry players. The processor needs to take this into account and offer a payment processing solution that reduces the risk of fraud. It’s considered the main challenge in travel agency payment processing.
Chargeback management. The high value and delayed delivery times in travel payment processing make it high-risk in terms of chargebacks. Instant alerts and added authentication can be used to make this less of a risk.
Fast settlement times. While the travel might not take place for weeks or months, the payment processing needs to go through quickly. It ensures that the bookings are made at the correct price with no problems.
Multiple payment methods. Many customers worldwide want to use local payment methods with tour operators and other travel firms. Others prefer bank transfers, credit card transactions using Google Pay, and other global payment solutions.
Multi-currency support. A travel payment may be made in any currency. This is why travel businesses need to accept payments in various currencies and convert funds seamlessly, if necessary.
Global acquiring. It is the process in the payment gateway that allows international payments to go through. It lets a travel process card payments, no matter where the card was issued. Given the importance of international transactions, this is a
Ability to handle high-risk merchant profiles. As we’ve seen, the high-value transactions and risk of chargebacks make the travel agent industry challenging. The payment collection process needs to be robust enough to handle this aspect.
Best payment methods for travel businesses
Credit card payments and other payment methods are used to make sure that everyone can choose an approach that suits them. The following are the leading payment options that are used by tour operators and other travel businesses.
Card payments
It is the most common travel payment processing solution. However, it can also prove to be the most complex for the merchant to handle. The pros include the high level of consumer protection. Some credit cards also offer rewards, such as air miles, when they complete transactions.
On the downside, transaction fees can be high due to the risk level. Friendly fraud is relatively common, which can cause problems for the travel agent.
Bank transfers
This method is typically used for high-value transactions such as luxury trips. The fees are low, and there is no chargeback risk for the travel agent to deal with. However, settlement is generally slow. A payment from an international bank account may take several days and require manual reconciliation.
Pay-by-bank
Also known as A2A payments, this is one of the most flexible payment options. International customers get directed to their banking app, where they carry out a secure authentication process and then make the payment. Such a payment method is supported by Genome and is carried out via our instant bank payments.
An API for money transfers is used to make the process simple and secure. It makes it among the safest online travel payment solutions.
Digital wallets
The likes of Apple Pay, Google Pay, and PayPal can all be used according to customer preferences. Payments made in this way reduce the fraud risk and make it easy for potential customers to complete transactions. However, the use of each wallet varies widely by region.
Installment payments
With this option, payments are made over a series of installments. However, the risk is taken by the buy now pay later operator, since the travel firm gets paid right away.
How travel merchants can reduce chargebacks
The risk of chargebacks is one of the biggest worries for tour operators and other businesses that accept payments for travel. To keep this risk as low as possible, the following tips are worth bearing in mind.
Clear cancellation policies. The cancellation policy has to be clear and easy to understand. The customer should be forced to check a box relating to this policy during the checkout process.
Pre-auth deposits. Pre-authorisation checks and deposits help ensure there won’t be any issues later due to insufficient funds.
Real-time confirmation emails. Some cancellations are due to unclear communication. By sending a clear confirmation in real time, the travel agent helps avoid any doubts or confusion.
Fraud scoring. AI-based fraud scoring systems analyse customer behaviour and other factors to quickly determine whether there is a risk of fraud.
3DS secure transactions. It is the most effective way to avoid fraud chargebacks in the travel business. Background data is checked to verify the transaction. It generally shifts the responsibility for possible fraud away from the travel agent.
Travel merchant account vs regular merchant account
What is a merchant account for the travel business? A regular merchant is enough for most businesses that provide an instant product or service. A travel merchant account needs to account for the higher risk posed by long lead times and high-value transactions.
The fact that future deliveries are involved is one of the key features of travel that a merchant account has to handle. It means that cash flow has to be dealt with correctly and fraud avoided. This is why travel payment solutions are more robust and thorough than in other industries.
Open an account
in Genome online
Genome’s solutions for travel businesses
Genome provides fast and efficient payment processing for the travel industry. This includes multi-currency accounts for travel agencies, hotels, and booking services.
We are currently offering instant bank payments, allowing clients to pay merchants via Pay by Bank. Card processing is coming soon, too.
Faster settlement compared to traditional banks is among the other benefits when using this payment processing solution and opening a business account with Genome.
A dedicated IBAN account lets you receive payments from abroad without any fuss. SEPA transfers and SEPA Instant support mean that instant payments are supported across the EU zone. With cross-border EU capability, you can accept local payment methods and debit cards across the world.
