Timeshares are intriguing and are in demand among many people looking to travel. But the timeshare industry is a notoriously high-risk field filled with chargebacks and fraud risks. The unique nature of the field also makes it where some customers might have second thoughts about what they are signing up for, thus prompting them to get refunds on their orders.
A timeshare merchant account should provide a timeshare dealer protection from these threats. But it should also provide a reasonable price for processing credit cards. It should offer a solution that is easy to understand and has a customer service team one can trust.
Why Are Timeshares High-Risk?
Timeshares are high-risk investments because of their arrangements. A timeshare is a vacation property where many people who invest in it will own that property. Each owner is given a set series of dates in the year when they can use the property they will support.
A timeshare can be useful because the annual maintenance fees and other charges associated with it can be low. It often costs less to have a timeshare than it does to rent a room at a regular resort or another property.
The problem with timeshares is that they can be at risk of chargebacks and fraud. Many people might have issues with their timeshare payments and may want to escape their contracts sooner. Others could be charged more than necessary or could be charged for services they do not utilize. These people will often request chargebacks because of these issues.
The high-value nature of timeshares also makes it where the industry is susceptible to fraud. A person could have one’s credit card info and utilize it to acquire a timeshare to sell off to others. The problem can be risky and can result in someone requesting a chargeback due to the issue.
There’s also the potential for someone to ask for a refund on a down payment. Many people commit to timeshares when they hear about them and sign up for down payments on them. But they are typically given a few weeks afterward to decide if they want to commit or if they want to get out of the timeshare. The people who leave the timeshare will often ask for refunds from their down payments, thus producing more chargebacks.
While timeshares might sound interesting, they are risky. Businesses that offer these timeshares also stand the risk of losing much of their profits from chargebacks. The risk makes it where a timeshare provider will spend more in processing credit cards than others. They may also have to reserve some of their card transaction profits a little longer.
What Will a Timeshare Merchant Account Provide?
A timeshare merchant account will cost more to utilize than a traditional account, but it will be worthwhile for these businesses. A timeshare provider will need one of these accounts to process credit card payments.
People aren’t willing to pay for timeshares with cash or checks. The expenses can be too significant for such payments. A merchant account is critical for timeshare providers, even if it means paying more money than other businesses for access.
An account will have higher fees and may be tougher for a timeshare provider to apply for, plus the contract terms could be restricted. But the work will be worthwhile, as it is easier for a timeshare provider to make money and to collect payments when it has a suitable merchant account.
What’s Included In a Merchant Account for Timeshares?
A merchant account can include many features to help a timeshare business collect payments:
- It can include access to a secure platform that offers fraud protection. The system can include analyzing a card’s address, reviewing a customer’s IP address or location, and other factors. A provider should adjust the parameters for its fraud protection system as necessary.
- Scalability is critical, as it allows a business to adjust its collection data based on what payments it collects and how it manages its money. A system can include support for more payment options after a while.
- Customer service is also necessary for success. The support team should be on hand to answer whatever questions a timeshare provider has about its payment work.
What About Cost?
A transparent fee structure is necessary for a timeshare merchant account. The timeshare dealer should recognize the fees one will spend when getting an account ready. These include charges relating to establishing an account and managing network transactions.
While the charges will be higher due to the high-risk status of the business, the structure will be manageable when the business knows what it will handle. The system should be clear and suitable for the business without being more complex than necessary.
The processor also shouldn’t charge setup fees, PCI compliance fees, or other things that may not be necessary. Many of these fees don’t mean much, as any business can be set up in moments and can be PCI-compliant without having to undergo regular daily monitoring.
The length of the contract is also a point to note. Some expensive services entail contracts that can last for years. Some high-risk businesses would pay excessive amounts to get out of these contracts, sometimes paying more than one would spend in a year to get out of a deal. But a monthly service where a business pays for the service each month without entering any long-term deals will be best.
How Long Does It Take To Sign Up?
It can take a few business days for a timeshare provider to get a merchant account ready. The approval process takes a little longer to manage, as the business’ financial data and documents require extra analysis. A provider can start processing card payments in about three to five business days on average.
A timeshare merchant account will cost extra, but it is a necessity. All timeshare businesses should look at how they can manage their payments through such accounts and how these systems can work as necessary.