3428 Carey rent-a-car

Introduction

• What it is: This MCC covers businesses that provide car rental services for various needs.
• Risk level: Medium — Higher risk due to potential vehicle damage and safety concerns.
• Acceptance difficulty: Medium — While many PSPs engage with this sector, thorough checks are often needed.
• Typical business models: traditional car rental agencies; luxury vehicle rentals; van and truck rental services; ride-sharing vehicle providers.
• For merchants: Expect moderate MDR; some providers may require reserves; anticipate detailed applications.
• What PSPs expect: Standard business registration; proof of vehicle insurance; clear terms of service on the website.

Payment Insights & Benchmarks

Merchants in the care rental industry should anticipate varying payment dynamics compared to standard e-commerce transactions. Acceptance often hinges on method mix, fraud prevention strategies, and the policies of payment service providers (PSPs).

Payment methods

Cards: widely accepted, though often scrutinized based on location and customer history; chargebacks can be a concern.

• E-wallets: gaining traction for faster transactions, particularly appealing to tech-savvy renters.
• Debit cards: increasingly popular; however, they may lead to higher decline rates due to insufficient funds.
• Corporate accounts: commonly used by business customers but require specific verification processes.
• Prepaid cards: useful for travelers who prefer to manage expenses but may be flagged for fraud.

Authentication & security

Strong Customer Authentication (SCA) is frequently employed, adding friction but enhancing security.

• 3D Secure (3DS) may lower approval rates but helps mitigate fraud risk.
• It’s crucial to monitor patterns of transaction attempts to detect potentially fraudulent behavior.

Benchmarks (indicative, not guaranteed)

MDR: generally higher than typical retail e-commerce transactions due to increased risk.

• Rolling reserves: often in the range of 10% to 20% to mitigate chargeback risks.
• Settlement cycles: typically longer, with a timeframe of 5-10 days to account for returns and disputes.
• Chargeback ratios: frequently exceed general e-commerce averages, particularly during peak travel seasons.
• Card approval rates: may be lower than usual due to higher scrutiny on rentals and longer verification processes.

Key metrics to monitor

Transaction approval rates segmented by payment type.

• Chargeback rates and the reasons behind them to promptly address issues.
• Customer feedback scores related to payment experiences.
• Average reservation value and associated payment methods.
• Peak traffic times and their correlating fraud patterns.

Risk & Compliance

Merchants in the car rental sector, classified under MCC 3428, face distinct risks that can impact their operational viability and compliance standing. PSPs and acquirers monitor these businesses closely due to the potential for high fraud rates, chargeback disputes, and stringent AML/KYC requirements.

Chargebacks & fraud

Common fraud types include identity theft, where stolen credit cards are used for vehicle rentals, and friendly fraud ("I didn't authorize this transaction") from customers claiming they did not rent a vehicle.

• Rental-related disputes often arise from damages, overcharging, or unauthorized fees, leading to chargebacks.
• Fraud mitigation tools such as identity verification checks, behavioral analytics, and transaction velocity limits can help reduce risks.

AML/KYC expectations

Robust identity verification processes are required, including checks against sanctions lists and Politically Exposed Persons (PEP).

• Verifying the source of funds is critical, especially for higher-value rentals or unusual payment methods.
• Manual review triggers may include high-value transactions, frequent rentals by the same individual, or payments from unverified accounts.

Operational red flags

Lack of transparency around ownership structures, which can obscure accountability.

• Traffic sources that are inconsistent or originate from high-risk countries, indicating potential fraud.
• Inadequate customer service responses to disputes can lead to high chargeback rates.
• Missing clear policies for handling damages, delays, or returns can alarm PSPs and indicate operational weaknesses.

Onboarding Checklist

Merchants operating under the MCC code 3428 for car rental services should prepare a comprehensive onboarding package for their PSPs or acquirers. A thorough submission not only enhances the chances of approval but also expedites the onboarding process.

Legal & corporate documents

company registration and incorporation documents

• disclosure of beneficial owners (UBO) and corporate structure
• valid licenses for vehicle 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 vehicle rentals and payouts
• description of antifraud setup and monitoring tools

Product & marketing

demo access or screenshots of the live reservation platform

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

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
• vehicle rental terms, deposit, and payment processes
• internal process for chargeback investigation and documentation

Regulation & Licensing

Licensing and certification are essential for merchants in the rental car industry (MCC 3428), as these credentials ensure compliance with local regulations and instill trust in customers. Recognition of licenses varies among payment service providers (PSPs) depending on a merchant's jurisdiction and target markets.

Operator licenses

Local business operating license — typically required in most jurisdictions to legally operate a rental service.

• Vehicle rental liability insurance — must be obtained to protect against potential accidents or damages during rental periods.
• Special permits — some regions require specific permits for operating car rental services, especially near airports or tourist hubs.
• City or municipality permits — certain locales may have additional regulations governing rental operations, necessitating local governmental approval.
• Environmental permits — in regions with strict environmental laws, rental companies may need to comply with sustainability regulations.

Geo-restrictions

Some countries impose restrictions on foreign rental companies, requiring local partnerships for operations.

• In certain regions, rental operations might be entirely banned unless specific criteria are met (e.g., insurance, fleet size).
• Mobility regulations can differ significantly by jurisdiction, affecting how easy it is to operate a rental service across state or national lines.

Certifications & audits

PCI DSS compliance is necessary for handling customer payment card data securely.

• Fleet safety audits to ensure vehicles meet legal and safety standards.
• Environmental audits to ensure compliance with green regulations where applicable.
• Regular inspections for vehicle maintenance and safety compliance, often mandated by local authorities.

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 are generally uniform across the networks, terms like "automotive rental" or "vehicle rental" may carry different implications in terms of acceptable practices. Some networks may require separate merchant IDs for different types of rental vehicles and enforce stricter validations on service agreements. Common reasons for denial in this category could include insufficient licensing, unclear insurance coverage, and improper documentation of rental processes.

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 service is vehicle rental, ensure you are classified correctly under MCC 3428. Classifying under alternative codes can lead to complications with payment processing and potential penalties. Always review your business activities to align with the correct MCC.

Best Practices for Merchants

Merchants in the car rental industry face unique challenges related to payment processing and customer experience. Implementing best practices in operations can help mitigate risks associated with chargebacks, optimize payment acceptance, and ensure a smoother relationship with payment service providers (PSPs).

Classification & transparency

always use the correct MCC for car rentals to prevent account issues and maintain compliance

• clearly display policies regarding rental agreements, insurance, and fees on your website
• ensure your billing descriptors accurately reflect your business name and services offered

Fraud & chargeback reduction

employ 3DS or step-up authentication for transactions with high-risk signals (e.g., online bookings from new locations)

• provide clear billing descriptors, immediate rental confirmations via SMS/email, and accessible customer support to resolve issues
• maintain detailed logs of rental agreements, vehicle usage, and customer interactions to support dispute resolutions

Payment acceptance optimization

accept multiple payment methods (credit cards, debit cards, mobile wallets) to cater to a diverse customer base

• route bookings to different PSPs based on geography and transaction type to optimize acceptance rates
• consider setting up separate merchant IDs (MIDs) for different car categories or regions to streamline reporting and risk management

Operational discipline

monitor key performance indicators (KPIs) such as authorization rates, chargeback ratios, and customer satisfaction scores

• conduct regular compliance audits and training for staff on payment processing and customer service procedures
• designate a dedicated team or individual to manage disputes and establish a clear process for handling chargebacks

Payouts & liquidity

prepare liquidity buffers to accommodate rolling reserves or advanced booking cancellations

• automate anti-money laundering (AML) checks for customer accounts, especially for high-value rentals or unusual behavior
• keep track of payout trends and review withdrawal patterns to identify any anomalies that may indicate risk

Business Scope & Examples

This MCC covers businesses that primarily offer car rental services. Merchants classified under this category usually provide vehicles for short-term use, catering to both leisure and business travelers. The scope is focused on companies offering traditional and peer-to-peer car rental experiences.

Models

traditional car rental agencies (e.g., Hertz, Avis, Enterprise)

• peer-to-peer car-sharing platforms (e.g., Turo, Getaround)
• airport car rental services
• long-term car leasing firms

Borderline cases

Ride-sharing services — platforms like Uber and Lyft; primarily focus on transportation rather than vehicle rental.

• Car sales companies — businesses that sell vehicles rather than rent them; not classified as rental services.
• Motor home and RV rentals — while related, they often fall under a different classification due to the specific nature of the vehicles.

Signals for correct classification

customer pays for the temporary use of a vehicle

• rental contracts specify a return period for the vehicle
• fleet management includes a selection of vehicles available for rent