3118 Valley airlines

Introduction

• What it is: This MCC covers businesses providing air transportation services.
• Risk level: Medium — Associated with ticketing fraud and chargebacks.
• Acceptance difficulty: Medium — Requires careful vetting due to higher risk concerns.
• Typical business models: airlines; charter flight services; air cargo carriers; helicopter services.
• For merchants: Expect moderate MDR rates; potential for reserves based on ticket sales; quicker processing with good history.
• What PSPs expect: Business registration documentation; proof of service operations; a clear refund policy outlined on the website.

Payment Insights & Benchmarks

Merchants in the airline industry should anticipate various challenges related to payment processing that can significantly impact their bottom line. Given the nature of this sector, understanding payment behaviors is essential for effective financial management and risk mitigation.

Payment methods

Cards: Dominant payment method; however, approval rates can be lower due to higher fraud risk and chargeback potential.

• E-wallets: Increasingly adopted for convenience, but acceptance can vary among travelers.
• A2A payments: Gaining traction, especially in markets with strong digital banking infrastructure.
• Loyalty points and travel credits: Commonly used but may complicate reconciliation and reporting.

Authentication & security

Strong customer authentication (SCA) practices are often required, especially for international travelers.

• 3D Secure may be implemented, which can improve approval rates but add friction at checkout.
• Enhanced fraud detection measures are crucial; high-value transactions can attract more fraudulent activity.

Benchmarks (indicative, not guaranteed)

MDR: Typically higher than standard e-commerce due to higher transaction values and fraud risk.

• Rolling reserves: Often required in the range of low to mid double digits to mitigate chargebacks.
• Settlement cycles: Generally longer, often exceeding 7 days due to the complexity of travel bookings.
• Chargeback ratios: Commonly elevated, especially during peak travel seasons.
• Card approval rates: Tend to be lower, with alternative payment methods offering better results.

Key metrics to monitor

Trends in chargebacks and reasons attributed to cancellations or service issues.

• Authorization rates segmented by payment method and customer segment.
• Average ticket size tracked per flight and the associated payment method.
• Customer feedback on payment experiences to identify friction points.

Risk & Compliance

Merchants categorized under MCC 3118 (Valley Airlines) face significant oversight due to the financial implications tied to travel and transportation services. PSPs and acquirers impose rigorous risk management practices, compelling merchants to effectively mitigate fraud, chargebacks, and comply with AML/KYC regulations.

Chargebacks & fraud

Frequent occurrences of friendly fraud, where customers dispute legitimate transactions after flying.

• Chargeback triggers often arise from dissatisfaction with service quality or delays, leading to customer disputes.
• Common fraud-mitigation tools include device fingerprinting, behavioral analytics, and chargeback management systems to identify trends and root causes.

AML/KYC expectations

Strong identity verification processes are expected, including checks against sanctions lists and Politically Exposed Persons (PEP) databases.

• Source-of-funds validation is critical, especially for high-value ticket purchases and bulk bookings.
• Manual review triggers include high-value transactions, unusual booking patterns, or multiple purchases from a single account in a short period.

Operational red flags

Lack of transparency regarding ownership or the operational structure of the airline can raise concerns for PSPs/acquirers.

• Involvement of payment methods from high-risk jurisdictions may provoke scrutiny.
• Insufficient customer service protocols can lead to elevated chargeback ratios, especially in response to poor customer experiences.
• Ambiguity in refund policies or a lack of clear terms of service can lead to disputes and chargebacks.

Onboarding Checklist

Merchants under this MCC should prepare a complete onboarding package before approaching PSPs or acquirers. A well-structured submission improves approval chances and shortens review times.

Legal & corporate documents

company registration and incorporation documents

• disclosure of beneficial owners (UBO) and corporate structure
• valid licenses for the relevant business activities
• policies: Terms of Service, Privacy, AML/KYC, Refund Policy

Financials & risk management

recent financial statements and cashflow forecasts

• liquidity or reserve model for payouts
• description of antifraud setup and monitoring tools

Product & marketing

demo access or screenshots of the live platform

• marketing plan and traffic source overview (affiliates, SEO, PPC)
• geographic targeting information

Technical integration & security

payment architecture overview with supported methods/providers

• description of SCA/3DS flows, retry logic, and tokenization
• PCI DSS compliance status and data storage policy

Operations

customer support coverage (languages, 24/7 if available)

• SLA for dispute handling and chargeback response
• deposit, bet, and payout limits; self-exclusion mechanisms
• internal process for chargeback investigation and documentation

Regulation & Licensing

Licensing and certification are critical for merchants in this MCC, as PSPs and acquirers will require proof of compliance before onboarding. Recognition of licenses depends heavily on the merchant’s jurisdiction and the markets they target.

Operator licenses

Federal Aviation Administration (FAA) — the primary regulator for aviation in the U.S., ensuring safety and compliance for airline operations.

• European Union Aviation Safety Agency (EASA) — oversees aviation regulations in the EU and grants necessary certifications for airlines operating within member states.
• Transport Canada — responsible for aviation safety regulations in Canada, requiring compliance for national air carriers.
• Many countries require specific air operator certificates (AOC) based on local regulations.

Geo-restrictions

Airlines may face restrictions based on routes that involve countries with specific embargoes or sanction lists.

• Jurisdictions may have varying requirements for international air transport, particularly related to safety and security certifications.
• Some regions limit the type of carriers that can operate certain routes based on bilateral air service agreements.

Certifications & audits

ISO 9001 for quality management systems, important for ensuring operational excellence.

• Safety Management System (SMS) audits to comply with international safety standards.
• Regular compliance audits for safety, security, and operational effectiveness, typically mandated by regulatory authorities.
• Environmental certifications might be required for sustainable operation practices in certain jurisdictions.

Official Definitions & Network Comparisons

This section shows how major card networks define this MCC and highlights practical differences that affect merchant onboarding.

Explanation:

While the definitions across networks generally align on the concept of air transportation, there are minor variances in terminology and compliance expectations. For example, Visa focuses more on documentation for international routes while Mastercard emphasizes compliance for cross-border services. Common issues in onboarding can include regulatory compliance, the need for valid documentation, and scrutiny on specific travel routes.

Alternative MCC Codes

Merchants often confuse this MCC with other categories. The table below shows which codes are related, why they are confused, and what risks misclassification brings.

Rule of thumb for merchants:

If your primary operations involve airline ticket sales or services, ensure you classify under MCC 3118. Misclassifying your business as a travel agency or retail can lead to compliance issues and potential account restrictions.

Best Practices for Merchants

Merchants under this MCC face higher scrutiny and must actively manage payments, risk, and operations. The practices below help build sustainable acceptance and reduce exposure to disputes and PSP restrictions.

Classification & transparency

always use the correct MCC; attempts to bypass classification often lead to account closure

• clearly display licenses, geographic restrictions, and responsible policies on the website
• maintain transparent business models and descriptors

Fraud & chargeback reduction

implement 3DS or step-up authentication for high-risk signals (amount, geo, device, velocity)

• use clear billing descriptors, instant confirmations (SMS/email), and responsive customer support
• log transaction and flight event details to build evidence for dispute representments

Payment acceptance optimization

support multiple methods (credit/debit cards, wallets, and local A2A) to reduce dependency

• route traffic by geography, bank, or method and test PSP performance regularly
• use separate MIDs for different travel services or regions to manage scheme requirements

Operational discipline

track KPIs such as auth rate, decline codes, chargeback ratio, ARPD, and LTV

• schedule compliance audits, update internal policies, and run test bookings
• assign a dedicated owner for disputes with SLA-bound responses

Payouts & liquidity

maintain liquidity buffers to cover rolling reserves and extended settlements

• automate AML checks for withdrawals, especially at threshold amounts
• monitor payout velocity and suspicious withdrawal behaviors

Business Scope & Examples

This MCC covers businesses primarily involved in air transportation services, including the operation of airlines and related travel activities. Merchants classified under this category usually provide services for carrying passengers and cargo over various distances, often including additional travel-related offerings such as ticket sales and freight services.

Models

regional and charter airlines serving domestic and international routes

• airlines offering scheduled passenger flights
• cargo airlines focused on freight transportation
• air taxi and private jet services
• travel agencies specializing in air travel arrangements

Borderline cases

Helicopter services — while some might provide air transportation, they are typically classified under a different MCC focused on specific services (e.g., medical or tourism).

• Non-scheduled flight services — private or charter services that may not fit standard airline models can present classification challenges; context matters.

Signals for correct classification

primarily engaged in the booking and sale of passenger or cargo flight services

• provides tickets for regularly scheduled flights or air services
• operates under a defined business model offering air transport as a core service