Yes, You Can Accept Credit Cards for Service Fees – Even If You’re Home-Based

Travel agents who think they’re too small to accept credit card payments for service and consulting fees are overlooking a number of options available to them.

“You still have some agents that just think it [processing credit cards] is beyond their reach or that they don’t have the resources available to them. But the resources are definitely there,” said travel industry veteran Jim Smith, CTIE, principal at jimsmithctie, inc.

For an overview of the options, Travel Market Report spoke to travel agents who have surmounted the barriers to accepting credit card payments and to vendors who cater to travel agents.

The bank barrier
To process credit cards, a business or individual needs to establish what is called a merchant account. This is simply a type of bank account that provides a mechanism for processing credit card payments.

But traditional merchant accounts – those processed through large banks – are hard to come by for travel agencies, especially home-based agents. While long-established agencies may be able to set up a traditional merchant account, most agents will find this door closed to them.

A closed door is what Maya Northen came up against in 2006, when she opened her agency, Chimera Travel, in Cherry Hill, N.J.

“I spoke with various banks to see what they offered, but most won’t work with travel companies. I had a tough time finding anyone that would support a new travel planning company,” Northen told Travel Market Report.

Travel considered risky
Lucy Hirelman, president of Berkshire Travel in Newfoundland, N.J., wasn’t surprised to hear of her colleague’s experience.

Hirelman opened her first merchant account with a bank 16 years ago. But her merchant account provider at the time was very clear that she was an exception to the rule.

“They told me the travel industry has the highest rate of chargebacks of any industry.” (A chargeback occurs when a consumer asks his or her credit card issuer to cancel or reverse a transaction after it has been completed.)

The travel industry may not actually have the highest chargeback rate, but travel is considered high risk in the credit card processing industry, according to one insider. That’s because consumers are likely to cancel planned travel and ask for a refund when frightened by world events –– especially since 9/11, he said.

Options for agents
Northen eventually established a merchant account for her agency with National Transaction Corp., a Coral Springs, Fla., firm that provides credit card processing for small (and large) businesses. National Transaction Corp. is recommended by ASTA, and Northen learned of the firm from an ASTA promotional email.

Other options widely used by travel agents include the Airline Reporting Corp.’s Travel Agency Service Fee (TASF) program and PayPal.

National Transaction Corp.
A preferred supplier of Vacation.com, and recommended by both ASTA and CLIA, National Transaction Corp. actively solicits business from travel agencies.

Judy M. Krotky, president of JMK Travel Inc. in Chicago, switched to the company after transitioning from a brick and mortar agency, where she processed credit card transactions through ARC, to a home-based agency.

After she started working from home, Krotky needed a company that offered an Internet-based service, which ARC did not do at the time. And like Northen she quickly came up against the banks, which denied her applications for a merchant account.

An email promotion introduced her to National Transaction Corp. The system offered by the company is easy to use and tracking payments is simple, she said.

Processing through ARC
One longstanding option for ARC-accredited travel agents is to process credit cards through ARC. Today, credit card processing is also available to agent members of its Verified Travel Consultant (VTC) program, using its Agent’s Choice tool.

Agent’s Choice is a web-based application that is intended for agents who do not have a GDS, or don’t want to use a GDS for service fee transactions.

Gail Marchand, owner of Marchand Travel in Watertown, S. Dakota, and a VTC member, has been using Agent’s Choice since 2007, the year she left her job at a brick and mortar agency to start her own home-based agency.

Agent’s Choice is easy to use, Marchand said.

PayPal
Steve Cousino, ACC, CTA, owner of Journeys by Steve in Springfield, Mo., occasionally uses PayPal to process credit card service fee charges. The online service, used widely by eBay vendors and online mom and pop stores, is easy to use and affordable, he said.

PayPal offers two options for collecting fees – its Virtual Terminal and an online/email invoicing service.

Cousino uses the invoicing service, which allows him to collect fees without even knowing a client’s card number. He simply sends clients an email invoice for his fees, and the client can click on a link and pay online.

It’s an easy way for Cousino to collect fees upfront. “I don’t do the work [research, booking] until the fee hits my PayPal account.” Plus, there is “little to no downtime” before funds become available to him, Cousino said.

For standard credit card processing, agents can use Pay PayPal’s Virtual Terminal. At higher volumes, agents must obtain PayPal’s approval for a merchant account.

Mobile application
Another option for processing credit card charges is a free mobile application called Square (www.squareup.com). This is the tool that Cousino uses most frequently.

“I have the phone with me nearly all the time, even if I don’t have my laptop available. So I’m able to process a service charge on the fly.”

The tool is very simple, he added. You open the app, enter the charge with a description, then enter the credit card details, and the charge goes through.

Finding your best option
Travel agents can find recommendations for vendors who will service their credit cards by checking with their agency marketing group, consortium, or host, as they may have a preferred supplier arrangement or recommend a company.

Agents can also post inquiries on online bulletin boards, such as OSSN’s agent forum and the Travel Professional Community forum. Agent bulletin boards regularly see exchanges on the topic.

See related story: “Collecting Service Fees a Quandary for Outside Agent,” Oct. 17, 2011.