Card Processing Risk For Travel Agencies

Before they set up an eCommerce travel agency, merchants should understand the potential sales agent liability associated with selling air fares online. Understanding risk exposure will help you take adequate steps to minimize it and protect your travel agency from losses associated with chargebacks resulting from customer disputes and fraudulent transactions. As a sales agent of an airline, for example, your travel agency may be liable for the entire amount of an airline ticket if it is successfully disputed by the customer or purchased with a stolen card account number. To mitigate risk, you need to establish eCommerce policies and procedures to address the following issues:

An authorization request that is approved by a card issuer indicates that the account is in a good standing. However, the transaction authorization approval is not a proof that the legitimate cardholder is making the purchase, nor is it a guarantee of payment. Be advised that, in most cases, airlines are liable for fraudulent card-not-present transactions, even when they were approved by the card issuer. As a travel agency, your organization may not necessarily be a Visa or MasterCard merchant subject to the Credit Card Associations’ rules and regulations. However, the airline is a Visa and MasterCard merchant and it is subject to their rules and regulations. Be advised that, in most fraud-related transactions, the airline transfers financial liability to the travel agency it has partnered with as part of the contractual agreement. In such cases your organization will bear the full financial responsibility.

Given the above examples, it is understandable why travel agencies are included among the highest-risk card processing merchants on both Visa’s and MasterCard’s lists. When selecting a payment processing partner to provide your merchant services, be sure to choose one with experience in working with travel agencies and other high-risk merchants. Your processor must be able to assist you in developing and implementing your fraud-prevention procedures and be proactive in identifying and correcting potential weak spots in your processing cycle.

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