Traveling should be an adventure, not a logistical nightmare. Yet, for many passengers, flight cancellations, reroutes, and lost baggage have become the frustrating norm.
“I recently went through this myself on what should have been a straightforward trip with SAS. My flight was cancelled, and I was then rerouted on a much less convenient itinerary through Vienna and Athens. I ended up stranded overnight, paying out of pocket for a hotel. To make matters worse, my baggage was lost and only recovered days later.” Dennis E.R. Pedersen, Director @ FastoPayments
Unfortunately, these scenarios are increasingly common in a travel industry still struggling with post-pandemic disruptions, staff shortages, and operational inefficiencies.
But beneath these inconveniences lies a complex web of payments, banking policies, and fraud risks that few travelers ever see.
The Travel Industry’s Growing Chargeback Problem
Travel and airline merchants face some of the highest chargeback rates across all industries. According to Ethoca and the Merchant Risk Council, chargeback rates in travel and hospitality often range between 1.7% and 3%, particularly during peak travel seasons and holiday periods. This is considerably higher than in sectors like retail or digital goods.
Cancellations, poor service, and compensation disputes fuel these rates. Even when merchants provide alternatives, customers frequently pursue chargebacks instead of refunds.
For payment processors and banks, high chargeback ratios trigger elevated fees, rolling reserves, and more stringent requirements. Chronic chargeback issues can lead to merchant account termination.
Further complicating the landscape is friendly fraud, where customers dispute charges under false pretenses. This costs merchants both financially and reputationally.
Merchants lacking robust fraud detection, clear policies, and proactive customer support remain vulnerable. Investing in these areas is critical for survival of the business and the merchant accounts.
Operational Risks for Airlines and Travel Merchants
Cancellations, reroutes, and service failures have financial impacts beyond immediate reimbursements.
Merchants also face:
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Non-refundable processing fees from chargebacks.
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Rising fraud monitoring expenses.
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Reputational damage that risks banking partnerships.
Travel is increasingly classified by banks and processors as a medium-to-high risk vertical, leading to higher scrutiny and operational costs.
Fraud and Scam Risks in the Travel Ecosystem
Fraud in the travel sector is rampant and continually evolving. Beyond chargebacks, merchants face threats like:
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Fake airline websites and fraudulent OTAs that scam customers.
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Phishing campaigns and social engineering, targeting travelers with fake updates and refund requests.
These threats contribute to over $1 billion in annual travel fraud losses globally. The broader impact includes reputational damage and operational disruption.
Banks and payment processors combat these risks with AI-driven fraud detection, real-time monitoring, and multi-layer authentication. Still, merchants must implement their own defenses.
Ignoring these risks can result in blacklisting by financial institutions, jeopardizing a business’s ability to operate.
Consumer Protections and Best Practices
Travelers should adopt smarter payment habits to protect themselves:
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Use credit cards for purchases to benefit from chargeback protections.
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Document all communication and transactions.
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Demand clear refund and compensation policies from merchants.
Visa, Mastercard, and major card schemes offer dedicated protections to assist travelers when airlines fail to deliver services.
Staying Compliant and Sustainable as a Merchant
For airlines and travel agencies, long-term sustainability demands commitment to payment integrity, fraud prevention, and regulatory compliance.
At FastoPayments, we help with high-risk merchant accounts in travel. We also assist with reducing chargebacks, prevent fraud, and maintain strong banking relationships. Our tailored expertise ensures merchants stay compliant and grow safely even in volatile markets.
With strategic support in payments, fraud management, and banking optimization, FastoPayments is the ideal partner for merchants aiming to scale securely in the high-risk travel space.
💡 Interested in learning more about what’s included in a typical high-risk merchant account? View our complete breakdown of FastoPayments’s high-risk merchant accounts.
