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INTERNET PAYMENT SYSTEMS
Internet Payment - An Overview
There are a number of ways to accept payment via the Internet, like processing
credit cards, accepting credit cards through a third party processor or using
companies like Payzip, which require some kind of membership from both parties.
Then there is the wide area of micro payments (nickels and dimes), which is not
relevant for travel business.
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Alternatives for the Travel Industry
For a small to medium sized agent or tour operator, there are basically two ways to
accept credit cards over the web:
1) apply for a merchant account with a major processor or
2) use a third party processor.
Merchant Account
In the first case your name will appear
on the customer's credit card statement and you are likely to get lower discount fee
from the bank than from a third party processor. However, banks are a bit picky in
that respect, you have to have some track record, otherwise you won't be accepted.
Third Party Processors
On the client's credit card statement the name of the
card processor will show up, not your name. They basically hold the merchant account
which they let you use against a fee. As for third party processors, they charge on
average a higher discount fee, but
in some cases they bring a lot of industry know-how to the table. Some of these
companies (the emphasis is on "some", there are a number of shady operators in this
business) have extensive experience in travel business and they tend to be a bit more
flexible than banks.
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Problems of Internet Payments in the Travel Industry
The travel industry faces a number of specific problems when accepting payments over
the Internet. First of all there is no physical handover of merchandise, it's basically
a service. Fraud is an issue here, unfortunately in both directions, from clients' side
as well as merchants.
Secondly, quite often the payment is well in advance of the consumption
of the purchased service and if there are changes, adjustments and refunds have to
be processed, something that neither credit card organizations, banks or credit card
processors like. If you are running a refund rate of 3 or 5% or more, you are likely to
be in trouble very soon with your bank or card processor.
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Technology of Payment Gateways
Third party processors are quite easy to deal with and the integration with their
payment system is (on average) rather painless. This is not quite true for a setup
with a bank, which tends to be a bit complex. To integrate a shopping cart system
or reservations system with the payment gateway of a large bank is a major job.
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