Making travel bookings takes a lot of effort from both the buyer and the seller’s point of view. If you’ve tried booking anything involving multiple payments, multiple currencies, multiple destinations or large advance payments, you know what we mean. Customers need to work with the systems and processes you have in place – if they’re not set up to do that, they won’t buy from you. It’s as simple as that. The frustrating thing is, this is happening right now to your business every day.
Research shows that 46% of travelers will abandon a booking if their preferred payment method isn’t supported.
Forty six percent. In other words, nearly half of all your prospective customers. Just gone.
If this post is for you, you’ll learn
- Why travel businesses require special merchant account services
- How specialized merchant accounts process international payments
- Cost reducing and conversion increasing solutions
- Booking conversion features and options
Travel Booking Payment Pain Points
Let’s back up and talk about what makes travel payment processing so challenging in the first place.
Travel is different from standard retail in one crucial way: you’re selling an experience that will take place in the future. A traveler books a vacation today for six months from now, making a multi-thousand dollar prepayment for something that they won’t receive for months.
This presents a series of very specific pain points.
- Customers are more demanding about flexible payment options.
- Travelers expect to pay in their home currency.
- Transactions and currencies are international.
- Chargebacks are higher because people’s plans change.
- Travel is seen as a “high risk” business by payment processors
This is why travel companies need a different type of merchant account to process bookings and payments.
A Travel Merchant Account will be set up to specifically handle travel industry payment needs. Features will be different from regular merchant accounts, with a focus on international, multi-currency and high risk processing. They are designed with the knowledge that you’re accepting large prepayments for services that will be delivered overseas in the future.
In short, normal merchant accounts are not travel-specific. They were made with physical products sold in stores in mind. But your customers aren’t buying jackets. They’re buying flights and hotels and tours, and they’re doing it from other countries and in other currencies.
The Challenges of Standard Payment Processing for Travel
Think about what happens when you use a regular payment processor
Travel gets lumped in as a “high risk” vertical with other categories like airlines, gift cards, gambling and gaming. This means your processing fees will be higher, your funds will be held in rolling reserves, and your account is more likely to be limited or frozen without warning.
Add in the fact that worldwide, Airline payment transactions alone cost the industry $20.3 billion in processing costs per year, and it’s no wonder that travel companies are on the hunt for better options.
The problem with standard payment processing is it just can’t handle the travel industry.
It’s higher risk. The fees are too high. Roll reserves are a headache. International payments are expensive. Chargebacks are sky high. Solutions designed for these challenges are what you should be looking for.
Why Travel Merchant Account Services Are Different
Travel merchant account services provide the specialized features you need to handle travel industry payments.
Multi-currency and Cross-Border Payments
Customers are making reservations from all over the world. They should be able to pay in their local currency with their preferred method, too. Travel merchant account services are the only solution that lets you accept 100+ currencies automatically, display prices in local currency to international customers, lower booking abandonment from currency confusion, and avoid losing money to foreign exchange spreads.
All of these processes happen automatically in the background, too.
Transaction Limits
Standard merchant accounts may put limits of $10,000 or less on your transactions. If a customer is booking a large international flight, that’s just not going to cut it. Travel merchant account services give you higher transaction limits for large bookings, no rolling reserves so all of your funds are available to you, faster settlement times, and the ability to handle larger transaction volumes during peak seasons.
This is an important detail. In fact, 75% of travel companies report that over one-quarter of their revenue is from cross-border payments. Your business depends on international transactions.
Advanced Fraud Protection and Security
Did you know that 71% of businesses report they have been the victim of a payment fraud attack? In the travel industry, your risk is even greater because of high ticket values and prepayments. Travel merchant account services will include real-time fraud screening, 3D Secure payment authentication, AVS address verification, chargeback prevention measures, and more to prevent these types of payments from affecting your bottom line.
Flexible Payment Method Options for Travelers
The truth about payment methods? Your customers don’t want to pay how you want. They pay however they want. Credit and debit cards are still the biggest payment method for travel, but options have exploded in recent years. Travel merchant account services will support cards and digital wallets from all major brands and networks, including Apple Pay, Google Pay, Buy Now Pay Later plans, bank transfers for large purchases, and other alternative payment methods depending on where in the world you’re accepting bookings.
The 46% abandonment rate we mentioned earlier? These are the solutions that fix it. When your customers can pay however they want, they do. Simple as that.
Conversion and Performance Optimization
Here’s the big secret that many businesses don’t realize about payment…
You think you’re saving money by using a low-cost payment processor. But you’re losing money in the failed transactions that would have converted if you’d set it up right, abandoned reservations, higher chargeback fees and the staff time to reconcile payments manually.
Travel merchant account services optimize every step of the process, routing transactions through the fastest-performing payment networks, retrying failed payments automatically, giving you the data to identify and reduce friction, and automating reconciliation with your booking system.
The result? Higher approval rates and lower processing costs.
Integration with Booking Systems and Compliance
Of course, your payment processor needs to integrate with your booking system to make the experience seamless. Travel merchant account services offer integrations with major travel booking platforms and GDS systems, accounting and reconciliation software, CRM to track customer payment preferences, revenue management and other back office tools.
On top of that, your payment processing is going to be subject to a range of local and international regulations like PCI DSS, GDPR and country-specific rules that get more complex every year. Travel merchant account services make this easy for you by maintaining PCI DSS Level 1 compliance themselves, updating your security automatically, having regional experts to help you navigate local payment regulations and encrypting customer data.
You take care of the bookings. They make sure your payments are compliant.
Optimizing for Global Reach
Last but not least, one of the interesting things about international travel payments is that each region has their own favorite payment methods and networks. WeChat Pay, iDEAL, PIX – these are all different local payment methods in China, Netherlands, and Brazil.
Travel merchant account services make sure you have access to these local payment methods wherever you’re looking to do business, giving you better conversion rates in each market, customers paying with methods they know and trust, less friction at checkout, and a better customer experience in every country.
Final Thoughts
Travel merchant account services are no longer a “nice to have” for travel companies. The fact of the matter is, the travel industry is only going to grow over the coming years. More travelers. More international trips. Larger transaction values and more prepayments. Travel is also seeing the rise of a wide variety of new payment methods and digital wallets. Standard payment processing can’t keep up with these trends.
The right travel merchant account services will help you accept a wider variety of payment types and currencies, lower failed transactions and booking abandonment, reduce your processing and fraud costs and give your global customers a seamless experience when booking with you.
It’s all about making it easy for your customers to book with you. A frictionless payment experience is your invisible competitive advantage.
