Why Travel Is Considered High-Risk by Acquiring Banks
Many acquiring banks classify travel businesses as high-risk. This perception intensified during the COVID-19 pandemic when government-imposed travel restrictions led to widespread trip cancellations, resulting in an influx of chargebacks and refunds.
From the bank’s perspective, excessive chargebacks and refunds signal potential business instability. Worse, high chargeback ratios can damage the bank’s standing with card schemes like Visa and Mastercard, risking fines or even loss of their acquiring license. For this reason, many banks approach the travel sector with heightened caution.
Getting Approved For a Travel Merchant Account
Despite these concerns, acquiring banks are gradually regaining confidence in the travel sector as global restrictions have eased. Chargeback levels have declined since 2020, and more providers are now open to onboarding travel businesses—especially those with strong compliance and transparent operations.
At Northern Payments, we work closely with several acquiring partners that actively support the travel industry. We can help negotiate competitive rates and guide you through the approval process for your card payment account.
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Compliance: IATA, ATOL & Trust-Based Alternatives
If you’re a travel business seeking to accept card payments, there are two key questions to consider:
- How long has your business been trading?
- Do you offer flights as part of your services?
Newly registered businesses (under 12 months) often need to provide more in-depth documentation to satisfy underwriters. Even established companies can face hurdles when switching providers due to the risk profile of the travel sector.
If your agency offers flights, direct IATA or ATOL membership is a requirement for most UK acquiring banks. Attempting to use another party’s membership is not acceptable for compliance purposes.
An alternative route is to join a trust provider. These organizations allow you to trade under their regulatory umbrella, removing the need to directly register with IATA or ATOL. This significantly reduces costs, as independent registration can cost thousands annually.
| Option | ATOL/IATA Required? | Merchant Account Setup | Estimated Setup Cost | Ongoing Cost |
|---|---|---|---|---|
| IATA Direct Membership | ✅ Yes | ✅ Required | £2,700+ (approx.) | £1,500+/year + compliance fees |
| ATOL Direct Licence | ✅ Yes | ✅ Required | £1,030 – £3,000+ | £1,050+/year (plus financial requirements) |
| Trust Account Model | ❌ No | ✅ You bring your own | £900 – £1,500 setup | £90 – £200/month subscription |
Sources:
- For full details on ATOL licensing requirements and costs, visit the UK Civil Aviation Authority (CAA).
- Learn more about IATA membership pricing and accreditation options via the official IATA website.
Coach Travel Companies
Coach travel businesses, while different from traditional travel agencies, often face similar challenges securing acquiring services. Even though they don’t sell flights directly, they are still classified under the same industry code (MCC 4722 – Travel Agencies and Tour Operators), which flags them as high risk. At Northern Payments, we understand these nuances and can help coach operators navigate the approval process, reducing the risk of declines and securing reliable card processing solutions.
Managing Chargebacks and Risk in the Travel Industry
Chargebacks are a common concern in the travel sector—particularly when dealing with high-value transactions like flights and holiday packages. Cancellations, changes in travel plans, or miscommunication can lead to customer disputes, often resulting in lost revenue and increased risk for your payment account.
To reduce the likelihood of chargebacks:
Clearly outline your refund and cancellation policy in your Terms & Conditions.
Display this information both online and at the point of sale.
Have customers agree to your terms through a signed contract or digital agreement.
While this won’t stop all disputes, following secure payment practices adds an extra layer of protection. Use:
3D Secure for online payments
Chip & PIN or verified face-to-face methods in-store
For further risk mitigation, consider using services like Verifi (Visa) and Ethoca (Mastercard). These tools allow you to:
Receive real-time alerts when a dispute is raised
Issue a refund before a formal chargeback is filed
Maintain a healthy chargeback ratio and avoid penalties from your acquiring bank
How we can help you
✅ Understanding the complexities of the travel payment space is key — whether you’re a new startup or an established agency. At Northern Payments, we stay fully up to date with card scheme compliance requirements, ensuring you’re always informed and prepared.
✅ We negotiate the best deals in the travel sector, helping you overcome high-risk challenges while keeping your monthly fees low and manageable.
✅ Beyond card payments, we also advise on the best booking platforms and industry-specific compliance practices — giving your business the tools it needs to grow confidently.
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