Airline Merchant Account Solutions: Payment Processing for Airlines and Flight Operators

When someone pays for a family vacation, they’ll likely end up purchasing multiple tickets that can easily run into the hundreds or thousands of dollars. This type of high-value purchase carries risks for merchant account providers, which is why some providers are unwilling to work with airlines. 

As an airline or flight operator, you need airline merchant account providers that understand the industry. From multiple payment channels to cross-border transactions, airlines have unique needs. By getting the best airline booking merchant account solutions, you can improve your approval rate and protect your revenue stream. 

To learn more about what to expect from airline merchant accounts, read on.

TL;DR

• Because tickets are purchased significantly earlier than the fulfillment date, there is a higher incidence of chargebacks, fraud, and disputes. As a result, airlines have a unique risk profile.
• High-value, cross-border transactions attract potential fraudsters, so a good merchant account provider will implement security and authentication measures that prevent fraudulent transactions.
• Clear descriptors, guidance based on reason codes, and advanced analytics can help prevent chargebacks from happening.
• During the peak season, account providers must be able to handle a sudden influx of transactions. Redundancies and strict security measures are necessary to avoid downtime.
• Because there are often partial and full refunds, payment processors must be flexible about how they provide refunds. Additionally, refunds may involve vouchers or credits.
• Airlines typically have ancillaries, such as baggage costs, drinks on the flight, and upgraded seats. The payment processor must be able to handle these ancillary charges.
• Many airline tickets are bought by international consumers. In order to accept payments and bring in revenue, the airline must have multi-currency functionality and local payment options.
• An airline’s approval rate will often drop because of issues with delayed capture, international card risk signals, incremental authorizations, repeated retries, and stringent fraud rules.

By finding the right merchant account provider, airlines can improve their approval rates, prevent fraudulent transactions, and ensure a frictionless experience for their customers.

Why Are Airline and Flight Operators Treated Like High-Risk Merchants? 

Airline merchant accounts carry unique risks, which is why airlines and flight operators typically work with high-risk merchant account providers. From longer timelines to high chargeback rates, the following are just a few of the reasons why merchant account providers treat airlines differently from standard e-commerce and online travel agents (OTAs).

• Longer Timelines: When a payment settles, it normally ends up in the merchant’s account. If a chargeback or refund happens, the money can be returned to the customer. Because there is an extended delay between when tickets are purchased and when they are used, the money is often already in the merchant’s account. For the account provider, this leads to higher risks. 
• High Ticket Value: While a coffee shop might have an average order value of $10, one estimate places the average airline ticket value at $582. When something goes wrong with airline transactions, the costs involved are much higher.
• Chargeback and Refund Risks: Unfortunately, many factors can get in the way of flight plans. Sudden storms, technical glitches, or arriving late can mean the passenger doesn’t make their flight. When this happens, the customer may ask for a refund or file a dispute with their issuer.
• High Disruption Rate: A corollary to the last reason is that airlines simply have higher rates of disruption. When you buy a sweatshirt, there are very few things that could disrupt your transaction as you walk from the clothing section to the checkout counter. With airline tickets, any regional unrest, weather problems, strikes, staffing shortages, maintenance issues, schedule changes, and route cancellations could easily lead to trip disruptions.
• Higher Rates of Fraud: Because airline tickets have a high transaction value and can be resold, they are an attractive target for criminals.
• Greater Financial Exposure: If there is a sudden spike in chargebacks or refunds, the high ticket value means the merchant account provider faces significant exposure. To avoid this type of risk, account providers often demand higher reserve requirements, volume caps, and stricter underwriting.
• Added Channel Complexity: Unlike many industries, airlines accept payments across a range of different channels. Onboard sales, airport terminals, online transactions, call centers, and app bookings are common, increasing the complexity involved.

What Airlines Need From Their Merchant Account Solutions

Airlines face special risks, which is why they need a merchant account provider that understands the types of services they need. When considering different providers, see if they offer the following airline booking merchant account solutions.

Multi-Currency Support

Airlines operate around the world, so they must be able to accept a variety of global currencies. To achieve lower cross-border fees and country-specific compliance, they need a local acquirer. Payment methods can also vary from one region to another, so it’s essential to have an account provider that offers the most popular payment types in each area.

Chargeback Management

Chargebacks are just one of the specialized risks that airlines face. Disputes are common, which is why airlines need a provider that can help them prevent and win potential disputes. 

Often, this involves creating clear billing descriptors, reacting to pre-dispute alerts, and receiving specific support based on the reason code. With advanced dispute analytics, companies can also monitor trends and figure out more effective ways to prevent chargebacks from happening.

Flexible Refund Flows

Unfortunately, airlines can’t simply issue a refund whenever a customer requests one. There are specific rules about whether a full or partial refund is allowed. Disruptions, split tenders, ancillary purchases, and other factors also impact the refund amount. 

As an airline, you need a merchant account provider that can handle refunds involving credits and vouchers. Additionally, your provider must be able to separate instances when auto-refunds are allowed and when a manual review has to be conducted.

Services Optimized for Airline Ancillaries

Airlines don’t just bring in revenue from ticket sales. From extra dining charges to baggage fees, there are many opportunities for ancillary charges. Because of this, it’s essential to have support for processing ancillaries online, onboard the plane, at the terminal, and on any other platform where a customer wants to make a purchase. To speed up the process, it’s essential to implement tokenization, one-click payments, and rules-based approvals.

Payment Solutions for Peak-Season Volume

When peak season arrives, the sudden influx of payments can overwhelm providers that aren’t prepared. This type of influx can lead to higher chargeback rates and increased fraud if the account provider’s security measures are overwhelmed. Because of this, you need a flexible, scalable airline merchant account provider. Besides a scalable gateway, the provider should have multiple redundancies, checkout optimization, and backup routes.

Airline-Specific Fraud Management

Flight operators are a frequent target of fraud. CNP and bot activity can lead to lost revenue for the airline and result in upset customers. 

To combat these issues, look for a provider that has stringent abuse controls and protection against bots. They should offer 3D Secure (3DS) authentication for high-risk transactions. Monitoring transactions for fraud, ensuring clear routing rules, and offering anomaly detection are also essential for managing and preventing fraud.

Airline Merchant Accounts vs. Standard Merchant Accounts

When it comes to airline booking merchant account solutions, there are a few key differences between the merchant account services required by a traditional merchant and the type of account services needed by an airline merchant account.

Airline Payment Challenges That Hurt Approval Rates

With airline bookings, there are a few common challenges that can negatively impact approval rates and increase the likelihood of declined transactions. Cross-border risk signals, inconsistent transaction data, aggressive fraud controls, and unique payment setups can reduce your approval rates if you are working with a provider that isn’t accustomed to airline merchant accounts.

• International Cards: International cards, foreign IP addresses, and billing address errors can look risky to the merchant account provider.
• Multi-Currency Issues: If the currency the transaction is in isn’t what the cardholder expected, it can end up leading to a card decline.
• Strict Velocity Rules: Sometimes, families and groups are blocked from purchasing tickets because of the volume involved.
• Difficult AVS/CVV Rules: In markets that don’t use AVS consistently, having stringent AVS and CVV rules can lead to problems.
• Confusing Error Messages: If customers get a confusing error message, they may retry the transaction repeatedly or cause multiple authorizations. Issuers tend to dislike repeated attempts, which can lead to approval issues.
• Delayed Capture: Sometimes, airline-specific patterns can look abnormal to issuers. Delaying capture or using a deposit-now-balance-later format can also impact approval rates.
• Incremental Authorizations: Some airline payment workflows involve partial or incremental authorizations, which can lead to declined transactions.

How PayCompass Offers Leading Account Solutions and Gateway Setups for Airlines

If you are struggling to find airline booking merchant account solutions, PayCompass can help. We offer gateways that are expressly designed for direct airline bookings and flight-related transactions. Whether you’re a tour operator or a regional airline, we can help you find the best solutions and services.

Through our chargeback prevention and dispute management, you can reduce two of the challenges airlines commonly face. We understand the needs of airlines, which is why we offer convenient integration options and multi-currency support.

With our multiple payment acceptance channels, you can accept payments at booking, online, at the terminal, in your app, and on the flight. Our payment systems are expressly designed for booking system integrations, so you can seamlessly charge customers and book flights to their next travel destination.

Final Thoughts

Airline payments involve significant sums, increasing the risk involved for your payment processor. Additionally, these payments involve delayed fulfillment, cross-border transactions, and multiple currencies. For many different reasons, airlines and flight operators have a higher incidence of chargebacks, refunds, and disputes.

The best airline booking merchant account solutions can prevent chargebacks, manage disputes, and process large payments. They offer the perfect balance of frictionless transactions for low-risk customers and state-of-the-art authentication protocols for high-risk clients. Through successfully managing transactions and preventing risks, the right airline merchant account provider can reduce your decline rate and help you achieve a consistent revenue flow. 
To learn more about merchant accounts for airlines and travel operators, reach out to our team of experienced payment processing experts today.