3387 Alamo rent-a-car

Introduction

• What it is: This MCC covers businesses primarily engaged in renting passenger cars.
• Risk level: Medium — Rental businesses can face chargebacks due to vehicle damage or loss.
• Acceptance difficulty: Medium — Requires thorough vetting to mitigate risks associated with car rentals.
• Typical business models: car rental agencies; online car rental platforms; airport rental locations; fleet management services.
• For merchants: Be prepared for moderate MDR; possible reserves on transactions; insurance requirements could impact approval rates.
• What PSPs expect: Comprehensive documentation of business practices; proof of adequate insurance coverage; detailed transaction history may be necessary.

Payment Insights & Benchmarks

Merchants in the car rental space, such as Alamo Rent-A-Car, should anticipate a unique set of payment dynamics. Payment acceptance can vary based on customer behavior, fraud risk, and the mix of payment methods offered.

Payment methods

Credit and debit cards: primary method for transactions, with strict checks for sufficient funds and card validity.

• Prepaid cards: used by some customers but may result in higher fraud rates.
• E-wallets: growing acceptance for deposits and convenience, but may have lower limits.
• A2A transfers: gaining traction but less common; customer education on usage is often required.

Authentication & security

Strong Customer Authentication (SCA) is frequently utilized, enhancing security but causing decline rates to potentially rise.

• Online and in-person transactions can experience different fraud dynamics, with in-person generally presenting lower risk.
• Continuous fraud monitoring is essential due to the high value and transient nature of rental transactions.

Benchmarks (indicative, not guaranteed)

MDR: generally higher than standard e-commerce due to risk factors.

• Rolling reserves: often established to mitigate potential chargebacks, usually in the low double digits.
• Settlement times: can be longer (5-10 days) due to transaction verification processes.
• Chargeback ratios: typically elevated compared to other retail sectors due to disputed transactions.
• Approval rates: may be lower relative to online retail due to stricter verification processes.

Key metrics to monitor

Payment authorization rates segmented by method and customer type.

• Chargeback trends and reasons, distinguishing between valid disputes and friendly fraud.
• Customer cancellation rates and their impact on payment processing metrics.
• Overall transaction value trends, particularly around peak travel periods.

Risk & Compliance

Merchants operating under the MCC 3387 (Car Rental Services) face significant scrutiny due to the potential for fraud and chargebacks, especially given the high-value nature of transactions. PSPs and acquirers expect these merchants to implement robust risk management and compliance measures to mitigate these risks.

Chargebacks & fraud

Common issues include friendly fraud, where customers falsely claim they did not authorize a transaction, and disputes over perceived charge discrepancies.

• Fraudulent bookings using stolen credit cards are prevalent, often involving cancellations or rescheduling to cover tracks.
• Mitigation tools such as device fingerprinting, real-time transaction monitoring, and anomaly detection provide valuable defenses against fraudulent activities.

AML/KYC expectations

Strong identity verification checks, including customer ID validation and matching against sanctions lists, are necessary to establish customer legitimacy.

• Monitoring for source-of-funds is crucial, particularly for high-value rentals, to ensure funds are legitimate and not coming from suspicious activities.
• Manual review triggers often include unusual booking behaviors, such as renters using multiple payment methods frequently or a high rental frequency in a short period.

Operational red flags

Lack of transparency regarding ownership and operational control can raise concerns, particularly with white-label rental operations.

• Traffic acquisition from dubious sources or unverified affiliates can signal potential fraudulent activity.
• Inadequate cancellation or refund policies may lead to disputes and chargeback claims, highlighting the need for clear communication with customers.
• Policies related to underage rentals or insufficient verification of renter’s age can pose additional risks that PSPs will monitor.

Onboarding Checklist

Merchants in the car rental industry, such as Alamo Rent-A-Car, should prepare a comprehensive onboarding package before engaging with PSPs or acquirers. A well-organized submission can enhance approval odds and expedite the review process.

Legal & corporate documents

company registration and incorporation documents

• disclosure of beneficial owners (UBO) and corporate structure
• valid licenses for car rental operations
• policies: Terms of Service, Privacy, AML/KYC, Refund Policy

Financials & risk management

recent financial statements and cashflow forecasts

• liquidity or reserve model for handling rental transactions
• description of antifraud setup and monitoring tools

Product & marketing

demo access or screenshots of the rental platform

• marketing plan and traffic source overview (affiliates, SEO, PPC)
• geographic targeting information
• KYC flow details, including IDV providers and thresholds

Technical integration & security

payment architecture overview with supported methods/providers

• description of SCA/3DS flows 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
• rental limits and policies; 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

Vehicle rental licenses — these are required by local governments and vary widely in scope and regulation.

• Business licenses — general operational permits may be needed depending on the city or state.
• Sales tax permits — necessary for collecting and remitting sales tax on rental transactions.
• Some jurisdictions may require specific insurance licenses or bonds depending on the scale of operations.

Geo-restrictions

Some regions impose restrictions on vehicle rentals, particularly in areas with high demand or regulatory concerns.

• International operations may face varying regulations based on local laws or international treaties.
• In certain states or countries, only licensed companies may operate, limiting acceptance of unlicensed competitors.

Certifications & audits

Compliance with PCI DSS for handling credit card information securely.

• Safety compliance audits for fleet vehicles, ensuring all cars meet regulatory and safety standards.
• Environmental compliance certifications, especially for electric or hybrid vehicle fleets.
• Regular audits regarding customer service standards and operational practices may be implemented by regulators.

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 core concept of car rental services is consistent across networks, differences in wording (e.g., “rentals” vs “leasing”) could affect onboarding requirements. Some networks may impose specific geographic restrictions or additional insurance criteria. Common denial reasons include failure to meet local regulatory requirements, inadequate vehicle fleet size, and non-compliance with PCI standards.

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 business activity is car rentals, ensure you classify correctly under MCC 3387. Avoid using other codes that may fit incidental services, as this can lead to compliance issues and potential financial penalties.

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 rental terms, insurance policies, and geographical restrictions on the website
• maintain transparent business models and billing descriptors

Fraud & chargeback reduction

implement 3DS or step-up authentication for high-risk bookings (e.g., large amounts, unusual geographies)

• use clear and immediate billing descriptors, confirmations via SMS/email, and accessible customer support
• log rental agreements and related interactions to provide evidence for disputes

Payment acceptance optimization

support multiple payment methods (credit cards, digital wallets, local payment options) to reduce dependency

• route transactions based on geographical origin, payment method preferences, or risk profiles and test PSP performance regularly
• consider using separate MIDs for different types of vehicle rentals or customer segments

Operational discipline

track KPIs such as booking conversion rate, chargeback ratio, customer inquiries per transaction, and customer satisfaction scores

• schedule regular compliance audits, update internal policies, and conduct test transactions on your platform
• assign a dedicated team or individual for managing disputes with predefined response SLAs

Payouts & liquidity

maintain sufficient liquidity buffers to handle rolling reserves and any potential delays in settlement

• automate AML checks for refunds and withdrawals, particularly for larger amounts
• continuously monitor transaction patterns and withdrawal behaviors for any signs of irregularities

Business Scope & Examples

This MCC covers businesses that provide automotive rental services, specifically focusing on those that operate rental vehicles for personal or commercial use. Merchants classified under this category usually offer services involving the short-term leasing of cars, vans, and other vehicles to customers who require temporary transportation solutions.

Models

car rental agencies (e.g., Alamo, Enterprise, Hertz)

• van rental services for commercial or event purposes
• truck rental companies (moving and delivery services)
• ride-sharing or car-sharing platforms with rental features
• peer-to-peer car rental services

Borderline cases

Car leasing — long-term leasing arrangements differ as they typically have set terms and conditions; usually not classified here.

• Taxi services — although they involve vehicles, they are generally considered a separate category focused on transportation rather than rental.
• Non-traditional transportation — services like bike or scooter rentals; while related, they diverge from motor vehicle rentals.

Signals for correct classification

customers rent vehicles for a short duration, typically hours to weeks

• services include customer self-drives or chauffeur services for rented vehicles
• transactions involve direct vehicle rental agreements with set rates and terms