3394 Kemwell group rent-a-car

Introduction

• What it is: This MCC covers businesses that provide rental services for vehicles.
• Risk level: Medium — Rentals can involve significant transaction values and potential for fraud.
• Acceptance difficulty: Medium — Some PSPs may impose additional scrutiny due to the nature of the business.
• Typical business models: car rental agencies; vehicle leasing companies; peer-to-peer car sharing services.
• For merchants: Expect moderate MDR rates; potential reserves may be required for large rentals; thorough customer verification processes.
• What PSPs expect: Proof of business registration; valid insurance documentation for vehicles; a clear policy on reservations and cancellations.

Payment Insights & Benchmarks

Merchants in the car rental industry should prepare for unique payment challenges and dynamics compared to standard e-commerce. Payment acceptance often hinges on customer profiles, booking methods, and potential fraud considerations.

Payment methods

Cards: commonly required for reservations; approval rates may be lower due to the nature of the rental transaction.

• E-wallets: useful for quick transactions but may have limitations on refunds.
• A2A transfers: gaining popularity for their convenience, though not all customers opt for this method.
• Prepaid cards: often used by customers without credit, but acceptance may be limited.

Authentication & security

Strong authentication (3DS, SCA) is frequently mandated for car rentals to mitigate fraud risks.

• These protocols help reduce chargebacks but may increase friction in customer checkout experiences.
• Ongoing fraud monitoring should assess patterns in bookings and customer behavior for early detection of suspicious activities.

Benchmarks (indicative, not guaranteed)

MDR: usually higher due to the risk associated with the travel sector.

• Rolling reserves: can be significant, often starting in the mid-single digits.
• Settlement times: generally longer (5–10 days) due to the nature of the transactions.
• Chargeback ratios: tend to be above retail averages; fraudulent claims are a concern.
• Card approval rates: lower compared to direct e-commerce, especially with high-risk profiles.

Key metrics to monitor

Authorization rates broken down by payment method and customer segment.

• Decline reason codes details to identify and address specific issues.
• Chargeback reasons categorized by fraud versus service-related disputes.
• Daily and weekly booking volumes to track trends and potential fraud spikes.

Risk & Compliance

Merchants operating under the MCC 3394 are exposed to various risks, primarily associated with vehicle rentals and related services. Due to the nature of transactions in this sector, including high-value charges and potential for misuse, PSPs and acquirers place significant emphasis on risk management practices to mitigate fraud and chargeback risks.

Chargebacks & fraud

High potential for friendly fraud, where customers dispute charges claiming they did not authorize them, especially with rental agreements.

• Instances of stolen card use for car rentals, posing a risk to newly established accounts.
• Common fraud mitigation tools include identity verification processes at the rental point, device fingerprinting, and transaction monitoring for unusual patterns or high-risk locations.

AML/KYC expectations

Rigorous identity verification required at the point of rental, including photo ID checks and proof of address.

• Sanctions and PEP (Politically Exposed Persons) screening on customers before vehicle rental agreements are finalized.
• Manual review triggers for large bookings, multiple rentals in a short time frame, or anomalies in payment behavior or rental history.

Operational red flags

Lack of transparency regarding the ownership of rental fleet or underlying operations, raising concerns about accountability.

• Insufficient verification of rental return procedures or unclear terms regarding damage and insurance coverage.
• Absence of customer support protocols for resolving disputes or complaints, leading to potential negative customer experiences.
• Inadequate measures for preventing vehicle misuse, such as policies against vehicle modifications or unauthorized sub-leasing.

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 operating a rental car business
• policies: Terms of Service, Privacy, AML/KYC, Refund Policy

Financials & risk management

recent financial statements and cashflow forecasts

• liquidity or reserve model for vehicle management and rentals
• description of antifraud setup and customer verification tools

Product & marketing

demo access or screenshots of the booking platform

• marketing plan and traffic source overview (affiliates, SEO, PPC)
• geographic targeting information for car rentals
• KYC flow details, including ID verification providers and thresholds

Technical integration & security

payment architecture overview with supported payment methods

• description of SCA/3DS flows, refund processing, and tokenization
• PCI DSS compliance status and data storage policies

Operations

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

• SLA for dispute handling and resolution processes
• rental and deposit limits; self-exclusion mechanisms for loyalty programs
• internal process for chargeback management 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

Motor Vehicle Rental Licenses — required in many jurisdictions to operate legally; recognition varies significantly by region.

• International Air Transport Association (IATA) accreditation — beneficial for car rental operations associated with airlines.
• Local business licenses specific to rental and leasing operations are commonly needed in most regions.
• Some markets may require additional insurance certifications for rental companies to ensure consumer protection.

Geo-restrictions

Countries with strict vehicle leasing regulations may limit or prohibit rentals without specific licenses.

• Certain regions may impose restrictions on foreign car rental companies, requiring local partnerships or subsidiary operations.
• National or state-based regulations may govern rental practices, varying widely across different jurisdictions.

Certifications & audits

PCI DSS compliance for handling payment card information securely.

• Safety and quality certifications for vehicles, ensuring that they meet local regulations and standards.
• Environmental audits in some regions, especially where eco-friendly vehicles are offered.
• Annual insurance audits to verify proper coverage and compliance with local laws.

Official Definitions & Network Comparisons

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

Explanation:

The terminology varies slightly, with some networks specifying "automobiles" while others refer to "cars" or "vehicle" rentals. This can influence how specific rental services are categorized. Additionally, each network may have unique requirements regarding licensing and documentation, particularly for international rentals or larger fleets. Denial reasons often include non-compliance with insurance requirements, lack of local regulatory adherence, and elevated risk profiles for certain market areas.

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 business mainly focuses on vehicle rental, classify correctly under MCC 3394. Misclassifying under alternative codes can lead to compliance issues, including rejected transactions and potential account closures. Always identify your primary service for accurate classification.

Best Practices for Merchants

Merchants operating in the car rental industry, such as those under the code 3394, must manage customer expectations and payment experiences effectively. Proper adherence to best practices is crucial for minimizing disputes, optimizing payment acceptance, and fostering strong relationships with payment service providers (PSPs).

Classification & transparency

always use the correct MCC; misclassification can lead to increased scrutiny or account closure

• clearly display rental policies, including any restrictions or additional fees, on your website
• maintain transparency in pricing, ensuring customers understand the total cost before confirming a reservation

Fraud & chargeback reduction

implement 3DS or step-up authentication during high-risk transactions to verify customer identity

• use clear billing descriptors that reflect the purchase accurately, along with prompt communication via email or SMS confirmations
• log all rental events and customer interactions meticulously to support dispute resolutions effectively

Payment acceptance optimization

support a variety of payment methods, including credit cards, debit cards, and popular digital wallets to accommodate customer preferences

• optimize payment routing based on geographical location or customer segments, and regularly test the performance of different PSPs
• consider using separate merchant IDs (MIDs) for different vehicle types or rental services to streamline operations and compliance

Operational discipline

establish key performance indicators (KPIs) such as authorization rates, chargeback ratios, and customer satisfaction scores to assess operational efficiency

• conduct regular compliance audits and simulations, refreshing your internal policies as needed based on industry standards
• designate a specific team member to handle disputes and ensure prompt follow-up on customer concerns

Payouts & liquidity

maintain proper liquidity buffers to manage rolling reserves and potential refunds due to cancellations or disputes

• automate anti-money laundering (AML) checks for large withdrawals to mitigate risks associated with fraudulent activities
• closely monitor payout trends and flag any unusual withdrawal behaviors for further investigation

Business Scope & Examples

This MCC covers businesses involved in the rental of automobiles, typically for short-term use. Merchants classified under this category usually provide vehicles to customers for personal or commercial use, often on a daily or weekly rental basis. The scope includes businesses offering services that enable customers to access vehicles without ownership.

Models

traditional car rental agencies (e.g., airport-based rentals)

• peer-to-peer car sharing platforms
• luxury and exotic car rental services
• van and truck rental companies
• motorcycle and scooter rental services

Borderline cases

Ride-sharing services — platforms like Uber or Lyft, where drivers use their own vehicles may not fall under this MCC as they are not primarily renting vehicles.

• Lease-to-own car arrangements — programs that offer vehicles on a lease basis with an option to purchase; typically classified differently from standard car rentals.

Signals for correct classification

customer rents vehicles for short-term (daily or weekly) use

• rental agreements are in place, specifying terms of use and fees
• vehicles are provided without a service driver included in the rental terms