Helping specialist tour operators and activity providers with travel ecommerce
How to deal with payments by card
HI Everyone,
First of all, thank you in advance for reading this, particularly if you
are able to help with what I hope is only a minor inconvenience.
I am working on a newly launched tour operator in the UK. The plan is
simple, the clients are there and the product is interesting (in my
opinion anyway). The main issue has always been getting in line with the
law and, after much work from our end, we are now in line with package
travel regulations as well as insurances, etc - thanks to some very
smart products by the people at IGI.
Our main issue now seems to be banking. We are able to easily and
quickly open a business account (partly as we dont need to borrow
money), but I am having an ongoing battle with the merchant account
services. After many debates with people from all the major UK banks I
have heard it all including: your business is unsafe, you dont provide a
service of any value (because people can just book a hotel themselves
and a bus and activities, etc), travel is high risk, you are high
risk... etc etc
Of course I am now completely frustrated and they have promised to
review my application, which only means more delays and the inevitable
crappy deal.
So my question is this: Does anyone have any experience of dealing with
other solutions? I am specifically thinking paypal and the like? Can I
work in multiple currencies?
How do small businesses, like ours, in a competitive and 'dangerous'
market get through these problems?
At the moment I am seeing the banks as an obstacle sitting between the
clients and me, one which arguably does not provide a service of any
value (after all, people can just hand money over to other people :-)
Hoping you can help and thanks again for trying!
First of all, thank you in advance for reading this, particularly if you
are able to help with what I hope is only a minor inconvenience.
I am working on a newly launched tour operator in the UK. The plan is
simple, the clients are there and the product is interesting (in my
opinion anyway). The main issue has always been getting in line with the
law and, after much work from our end, we are now in line with package
travel regulations as well as insurances, etc - thanks to some very
smart products by the people at IGI.
Our main issue now seems to be banking. We are able to easily and
quickly open a business account (partly as we dont need to borrow
money), but I am having an ongoing battle with the merchant account
services. After many debates with people from all the major UK banks I
have heard it all including: your business is unsafe, you dont provide a
service of any value (because people can just book a hotel themselves
and a bus and activities, etc), travel is high risk, you are high
risk... etc etc
Of course I am now completely frustrated and they have promised to
review my application, which only means more delays and the inevitable
crappy deal.
So my question is this: Does anyone have any experience of dealing with
other solutions? I am specifically thinking paypal and the like? Can I
work in multiple currencies?
How do small businesses, like ours, in a competitive and 'dangerous'
market get through these problems?
At the moment I am seeing the banks as an obstacle sitting between the
clients and me, one which arguably does not provide a service of any
value (after all, people can just hand money over to other people :-)
Hoping you can help and thanks again for trying!
Tags: matters, merchant, money, new, operator, regulations, services, tour
Views: 150
Replies to This Discussion
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Permalink Reply by Alex Bainbridge on -
Hi "I hate banks" - perhaps the clue is in the name :)
Options
A] Join an organisation such as TTA, TOPP etc who increase the probability of being accepted for a merchant account (but don't guarantee it)
B] Paypal is fine (and works in multiple currencies). It is slightly more expensive (in terms of % merchant fees) than a conventional merchant account but it works fine. Just watch out with Paypal as sometimes they can hold money back... Mind you banks do that too.
Cheers. Alex
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Permalink Reply by Ihatebanks on -
Thanks Alex,
I appreciate the help, I have looked at TTA and TOPP and found their systems rather restrictive in terms of actually operating the trips (releasing deposits, paying suppliers, etc). Plus the failure cover is already in place and I didn't want to double up things unnecessarily.
Paypal seems to be fine, I spoke to one of their sales people and they are happy to deal with multiple currencies and large payments, it also has a pretty easy-to-understand online format. My only concern is really the way it looks to potential clients, I sort of felt that using paypal might look a little 'cheap'.... But I am not sure that's true, it was just something that lurked at the back of my mind through using it only ever as an eBay product. Plus I am not sure but I think it makes people sign up for a paypal account when paying... can't see my clients doing that.
Another option is the a hefty % discount on payments made by transfer... but in a day of air miles and other built-in credit card insurances I wonder how many people will be happy with that
Anyway, thanks again for your help!
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Permalink Reply by Alex Bainbridge on
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Hi there
With paypal you can send a request for payment to a customer - they click a link and make a payment. They don't have to join paypal to do that.
Or you can put paypal into a booking engine - where there is a tick box to join paypal - but it is quite natural and not too obtrusive
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Permalink Reply by Stephen Harding on -
Hello "I hate banks" I have used Barclaycard Merchant services for years now and they are fine. They keep the money, before releasing to our bank account, for a number of days because of security. But that is no longer a cash flow issue for us. (The number of days has been reduced over the years as I have shown annual accounts) I joined a tourist organisation, in my case Tourist South East, because then I recieved better rates from Barclaycard. However Barclaycard may be more strict now then they were in the early days.
However I have been approached recently by Retail Merchant Services (www.retailmerchantservices.co.uk) and they claim they could beat my rates with Barclaycard. To be fair to them they couldn't but it was worth a chat with them as they offered a number of other services, such as free banking (with Alliance & leicester), business insurance, etc. the credit/debit card processing is with Elavon, a wholly owned subsidiary of US Banking corp. They didn't seem to be phased by so called "risky" business, so might be worth a call
Cheers
Stephen
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Permalink Reply by Ihatebanks on
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Hi Stephen,
Thanks for taking the time to post here and for your suggestions. I am waiting to hear from BMS (Barclays) but in essence I am told that they are perhaps the most understanding when it comes to our business sector. I did get in touch with Retail Merchant Services as you suggested and I was surprised to receive the following response:
I am sorry to inform you that we would not be able to provide a merchant service for your business type (Travel). Unfortunately your business would fall into the ‘Prohibited Business’ type as dictated to us by our processing bank Elavon.
Perhaps their attitude to Travel has changed in light of recent events....
Anyway, I will keep searching just in case something new comes along....
Thanks again!
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Permalink Reply by John Walsh on -
We have had the same problem, and it really became a major problem: ready to launch and no way of taking credit card payments. Banks and payment processing systems do not want to know at all! It is not worth even applying because it can show up as just another credit check carried out, and you should not have too many of those (for personal or for business credit histories)...even if you have lots of money and no need for any credit.
I went through the application process for Paypal. It was long and they made it as complicated as possible. They turned us down and they would not give a reason why (not a credit rating problem on our side, we have checked), but potentially a travel industry problem. They do allow you one alternative which is sending an email to customers asking them to pay using their credit card, but you do not process it directly. Honestly the % they charge is scandalous, so not even worth it. (I have asked customers if they want to pay by Paypal, and not one has said they are interested in it).
The TTA might be worthwhile. We are in the process of applying, but it does not guarantee you a payment facility. But they also have T-Atol which seems to be another plus.
At the moment, we are asking customers to pay by bank transfer online. Not the best solution, but there is no other option. The alternative might be to look abroad for banks or payment systems that have not become anti-travel. I have heard murmurs of one in Italy which I am trying to find out about. Hopefully in the future, if we can show the books for a healthy business then we can strengthen our case when applying to a credit card payment processing outfit.
One other alternative, but a bit iffy is to use somebody else’s payment facility and get them to transfer you the money. If you know anybody with a payment facility in an industry that is not shunned, then try doing this, but you will have to inform customers that they are paying another organisation. I thought about doing this, but in the end decided against it because it seems too dodgy for all concerned.
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Permalink Reply by Ihatebanks on
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Ouch John... just when I was starting to feel confident about Paypal being the only reasonable option for us... nightmare!
Let me know if you come up with anything reasonable in the near future and good luck!
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Permalink Reply by Dee Edwards on -
"They do allow you one alternative which is sending an email to customers asking them to pay using their credit card, but you do not process it directly. Honestly the % they charge is scandalous, so not even worth it. (I have asked customers if they want to pay by Paypal, and not one has said they are interested in it)."
This sounds quite interesting. Does it matter to the customers whether it's Paypal or not, all they need to know is that they are able to pay via credit card.
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Permalink Reply by Barry Coleman on -
Hi
Suddenly Im not alone.......I really sympathise with your situation. I have a specialist tour operation for 5 yrs and believe it or not NEVER HAD ONE SINGLE CHARGEBACK> Then that dreaded letter came form Barclaycard Merchant Services advising us that "due to the sector we trade" they have put us on a 30 day settlement. In short, I need to find around £100K in July to pay my suppliers and wont get a penny from barclaycard until early August. My own bank is completely unsympathetic in even assisting with a small overdraft to cover this period. The banks are evil money grabbing devils that have ATTITUDE throughout there whole structure.
I have tried numerous suppliers and as soon as you mention "travel" the phone call becomes very short. The TTa do NOT gaurantee Credit card facilities. They even "reccommend" Streamline...... Just try calling Streamline and say your in Travel and again you are left with "Risky Sector" excuse.
The irony of the end result would mean good and viable tour operators have yet another hurdle to overcome and will go to the wall. When they go to the wall, there will be claims on the credit card companies who started this circle in the first place.
With Paypal, I have found that your client can only charge small amounts until verified. here are other suppliers such as ALERT PAY who charge a WHOPPING 4.99%
I truly hope you get a solution.... and if you do , please inform all as we are all searching.
Regards
Barry
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Permalink Reply by Ihatebanks on
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Hi Barry,
Thanks so much for your note. I am now exactly where I was weeks ago and still looking for a solution.
The bank is only too eager to be our 'business banking solution' but any time we deal with their Merchant Services representatives they bring up all the same issues again and I go back to square one.
Someone suggested opening a shell company within another sector and get that approved for a merchant account. Or even use the merchant account of someone else's company (family or friend). How ridiculous is this? I feel like we might aswell be in the 'drugs and organised crime' sector....
Paypal is still our only viable solution at the moment. They didn't mention anything about clients having to be verified but I will check with them again. I didn't know about Alert Pay, at 4.99% I would feel like I am being taken for a ride but I guess that's the world we live in...
Thanks again....
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Permalink Reply by Dee Edwards on
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Barry, given your business seems to have a good track record, it may be worth having a chat to TOPP (travel & general).
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Permalink Reply by John Walsh on
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If your suppliers are based abroad, then it might be worth considering a bank in one of those countries. I have had a quick conversation with a bank manager in Italy and he seemed surprised that UK banks and processing companies are so tough on travel companies. Obviously things might change as the conversation progresses.
Having spent a bit of time looking into payment facilities, some stuff does confuse me!
I know that the majority of customers like to pay by credit card because it allows them to offset the payment and ‘pay it off’, but there is also a sense of security when booking using a credit card. Is this really the case?
1. If their holiday is effected/ cancelled due to a force majeure (like the ash cloud), then most travel companies/ TO’s have terms & conditions that do not hold them liable. Therefore, there is no breach of contract between the TO and the customer. Looking at the Consumer Credit Card Act: credit card companies will only withhold payment/ refund if the supplier (TO) has breached their contract in terms of delivering the ‘purchase’. So in this case, the credit card company is not liable or responsible for refunds (I don’t know what your experiences have been in reality after the ash cloud). The consumer’s only recourse is potentially through their travel insurance, depending upon the terms of the insurance (which in most cases is unlikely to help). Lots of ‘consumer advice’ I have seen or heard, tells consumers to try their credit card company. This is wrong isn’t it? So consumers have a false sense of security against the unpredictable obstacles to holidaying.
2. If the holiday is effected/ cancelled by a TO going under.
If the holiday has some form of ‘safeguard’ in place then they are covered: a flight element with ATOL then they will be flown home/ “package” with ABTA, then they will be refunded.
If the holiday has no ‘safeguard’ in place, then they can either look to their credit card company or their travel insurance.
I overheard somebody on a plane the other day saying that both ATOL and ABTA have been suggesting that the credit card company is the first point to look for recompense. If this is the case, then what would be the point in selling any ‘safeguarded’ holiday?
If all of the above is true then are we really looking at a new reassurance for consumers?
1. Get travel insurance that covers force majeure, because that is the only way to get reimbursed in those situations
2. Pay by credit card, just in case the holiday company (whether it has safeguards in place or not) goes bust.
If the above is true, then are we all going to be hit even harder by credit card companies (even those TO’s with long histories of strong accounts with payment facilities)? Is there the possibility that 1 more Goldtrail will be enough to knobble payment facilities for good?
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