- January 11, 2020
- Posted by: admin
- Category: Uncategorized
With the advancement of technology, traditional methods of doing business are also evolving. Almost every type of business is now offering services and products online. To accept payments via credit/debit card online merchants apply for a merchant account. So, as a merchant account provider, it is really important for you to understand that there are businesses which are considered high risk in such case you have to be very particular in selecting the high risk industries you want to deal in. Here in this article, we will be discussing travel ticketing business or travel agency, one of the high risk industries.
Pros of providing payment gateway (merchant account) to travel agency industry
§ Evergreen industry: The best part about the travel industry is that it will never go out of fashion. The first recorded travel agency started back in 1841. Since then the travel agency industry is growing and in the coming years to it will maintain its place in the market. Though technology has made things a lot simpler and people are traveling and arranging things on their own, travel agencies are still in demand and many more new agencies are coming up. So, there is no reason for not providing merchant account services.
§ High rate of return: Investing in travel agency merchant has higher chances of great return and lesser chances of any loss. Other than the advantage of providing a merchant account to air ticketing business this is the most important one that you will make extra cash. A lot of money is involved in this industry and you as a merchant account provider can also earn in pretty figures.
§ Growing at a good rate: Despite the number of challenges faced by air travel ticketing business it is growing at great speed. In the coming year according to stats available it is believed that this industry will reach up to 29.3 billion U.S. dollars! Without any surprise, the travel industry is the second-fastest-growing sector in the world! And it is happening because now a large section of society is able to afford it, social media is also playing a vital role as travel bloggers have a big influence on people. Investment in the travel agency industry is a long term fruitful investment for Merchant account provider.
§ Global Existence: It is an industry that is not geographically bound; it exists in every part of the world and in fact making profit everywhere. So, you can easily get a good number of clients wherever you set your business.
§ Another feather in the cap: Nobody can deny this fact that “more is better”. If you will provide payment gateway to travel agency you will have one more service to offer and. You will expertise in dealing with another high-risk industry which will definitely improve your goodwill and make your hold even stronger in the market
Cons of providing payment gateway (merchant account) to travel agency industry
With the pros mentioned above, there are cons of this industry that can’t go unnoticed. The travel agency industry is a high risk business so definitely it gives some extra trouble to the merchant account provider.
· Advance payment: The major drawback of this industry is that the payment is made in much before in advance for the services not yet offered by a travel agent. This makes it really risky because if due to any personal reason customer canceled the trip at the last moment then travel agent has to bear a great loss as everything from tickets to hotel is pre-booked. At last, this affects the merchant account provider as well.
· High chargeback amount: Another major issue with the travel industry is that it not only faces a lot of chargebacks but faces very expensive chargeback. A chargeback is a fraudulent activity that occurs when a customer is not satisfied with the services offered and wants his money back. Now here in the travel industry the services offered are all expensive, they somewhere at least cost a few hundred dollars. All these chargebacks become the responsibility of merchant account provider which affect the payment provider monetarily and also deeply hurt the goodwill.
· Sudden shut down: Due to highly prone chargeback business, travel businesses often end up failing. They shut down suddenly when they don’t even have money to refund of the prepaid services.
· High transaction volume: Travel industry is risky because high transaction volume means a large chance of loss. Even the normal transaction has some risk involved then you can imagine how much financial risk is involved in the travel industry. It becomes hard for a merchant to maintain a healthy credit score due to high transaction volume.
· International sales: Travel agencies deal internationally which makes them even riskier as different countries present varying degrees of political, economic and social risks and also it needs extra security because risk factor of the customer being a fraud increases. If not managed properly then it can cost heavy to both travel agency merchant and merchant account provider.
· Highly prone to frauds: Industry that makes big transactions overseas is very much prone to fraud. It attracts transaction laundering being highly exposed to chargebacks. Merchants that offer expensive services are much more vulnerable to fraud and they are favorites of cybercriminals.
You must have heard of this proverb, “no pain, no gain”. And a similar situation is here. If you provide a payment gateway to someone for air travel ticketing business then you have to deal with risks to later enjoy the good profit. With proper planning and setup, the best high-risk travel agency merchant account can be provided to the merchant which will help both merchant and merchant account providers to grow.