3518 Sol hotels

Introduction

• What it is: This MCC includes businesses that provide hotel and lodging services, particularly those with a focus on resort-style accommodations.
• Risk level: Medium — The hospitality sector can face seasonal variations that impact revenue.
• Acceptance difficulty: Medium — Some payment processors may require additional documentation due to varying guest payment methods.
• Typical business models: hotels; resorts; wedding venues; boutique inns; vacation rentals.
• For merchants: Expect moderate MDR fees; potential for chargebacks during peak seasons; customer expectations for flexible booking options.
• What PSPs expect: Valid business documentation; proof of compliance with safety regulations; clear cancellation and refund policies available online.

Payment Insights & Benchmarks

Merchants in this MCC should plan for a unique set of payment dynamics that reflect the hospitality industry's diverse customer base. Understanding these insights will help optimize payment acceptance and minimize transaction-related challenges.

Payment methods

Cards: widely used but may face higher decline rates based on risk assessments and travel origin.

• E-wallets: popular among travelers for convenience and speed, offering an alternative to card payments.
• Bank transfers: commonly used for large bookings, though they may introduce longer settlement times.
• Prepaid cards: often preferred for customer privacy and to manage spending while traveling.

Authentication & security

Strong Customer Authentication (SCA) may be mandated for card transactions, impacting the customer experience.

• 3DS (Three-Domain Secure) is frequently utilized, which can increase friction but reduces fraud.
• Continuous fraud monitoring is essential, particularly in high-risk travel seasons, to manage chargebacks effectively.

Benchmarks (indicative, not guaranteed)

MDR: typically higher than standard e-commerce due to service and risk factors.

• Rolling reserves: may be required, often starting at a percentage of monthly volume.
• Settlement cycles: usually longer than e-commerce, often exceeding 5-10 days.
• Chargeback ratios: can be elevated compared to retail, reflecting higher travel-related disputes.
• Card approval rates: generally lower, with e-wallet and bank transfer rates potentially higher.

Key metrics to monitor

Authorization rates segmented by payment method and customer type.

• Decline reason codes to identify patterns in transaction failures.
• Chargeback statistics categorized by reason (e.g., fraud, service issues).
• Average transaction value for better cash flow management.

Risk & Compliance

Merchants within the MCC code 3518 (SOL HOTELS) face unique challenges related to risk and compliance due to the nature of their services and customer transactions. PSPs and acquirers closely monitor these businesses for chargeback activities, fraud incidents, and compliance with AML/KYC regulations.

Chargebacks & fraud

Common types of fraud include friendly fraud, where customers claim they did not authorize a transaction, as well as booking fraud using stolen credit card information.

• Chargebacks can surge during peak seasons when travelers are more active, making it crucial for merchants to manage any influx of disputes.
• Mitigation tools such as chargeback alerts, fraud detection software, and identity verification checkpoints should be employed to combat these risks.

AML/KYC expectations

Merchants must implement robust customer identity verification processes, including document checks and customer verification through government IDs.

• PSPs require sanctions screening to prevent transactions with individuals or entities on watchlists.
• Manual review is often triggered by high-value bookings, frequent alterations to reservations, or suspicious payment behaviors, such as using different cards for single customer accounts.

Operational red flags

Lack of transparency concerning ownership or management structure can raise red flags for PSPs; clear information about the operators should be provided.

• Absence of clear refund and cancellation policies can lead to disputes and dissatisfaction, increasing potential chargebacks.
• Traffic coming from unreliable or unverified sources may be monitored closely, indicating potential fraud risk.
• Missing or unclear compliance measures relating to responsible gaming can also be a concern for acquirers.

Onboarding Checklist

Merchants operating under the MCC 3518 (SOL HOTELS) should prepare a comprehensive onboarding package before reaching out to PSPs or acquirers. A well-organized submission can enhance approval likelihood and expedite review processes.

Legal & corporate documents

company registration and incorporation documents

• disclosure of beneficial owners (UBO) and corporate structure
• valid licenses for operating in the hospitality sector
• policies: Terms of Service, Privacy, AML/KYC, Refund Policy

Financials & risk management

recent financial statements and cashflow forecasts

• liquidity or reserve model for refunds and payouts
• description of antifraud setup and measures in place

Product & marketing

demo access or visual content showcasing hotel offerings

• marketing plan detailing traffic sources (online travel agents, affiliates)
• information on geographic targeting and customer demographics
• KYC flow details related to guest identification processes

Technical integration & security

payment architecture overview with supported payment methods

• description of SCA/3DS flows for online bookings
• PCI DSS compliance information and data storage policies

Operations

customer support setup, including multilingual support if available

• SLA for handling customer disputes and inquiries
• booking and cancellation policies, including deposit requirements
• internal process for managing chargebacks and customer complaints

Regulation & Licensing

Licensing and certification are essential for merchants in the SOL HOTELS MCC, as payment service providers (PSPs) and acquirers will require evidence of compliance before onboarding. Recognition of licenses varies significantly based on the merchant’s location and the markets they serve.

Operator licenses

Local hotel and tourism licenses — often required by regional governments, recognition varies based on jurisdiction.

• Health and safety certifications — necessary for compliance with local health regulations in hospitality.
• Alcohol licensing (where applicable) — essential for establishments that serve alcohol and regulated by local authorities.
• Business operation licenses — general licenses needed to conduct business within a specific region or country.
• Some countries may impose specific licenses depending on the type of amenities offered (e.g., spa, casino).

Geo-restrictions

Countries with strict tourism regulations may have limitations on hotel operations, affecting acceptance.

• Some jurisdictions require a local presence or ownership to issue operational licenses for hotels.
• International tourists may face limitations in some regions due to government tourism policies or regulations.

Certifications & audits

PCI DSS compliance for handling card data, ensuring secure transactions.

• Health and safety inspections and certifications to meet local regulations.
• Sustainability certifications may be required or be considered beneficial in some markets.
• Annual audits for operational compliance with local laws and regulations.

Official Definitions & Network Comparisons

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

Explanation:

While there is a general consensus on the primary focus of lodging services, variations in terminology can lead to different classifications (e.g., "accommodations" vs. "lodgings"). Some networks might require separate merchant identification numbers (MIDs) depending on the business model or geographical area. Common reasons for onboarding denial include insufficient documentation proving ownership or operation, as well as regional compliance issues.

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 primarily offers hotel or lodging services, it should align with MCC 3518. Misclassifying under alternative codes can lead to compliance issues and potential financial penalties. Always aim for the most accurate code to avoid risks.

Best Practices for Merchants

Merchants in the hotel and lodging sector face unique challenges related to payment acceptance and customer interactions. Adopting best practices in this area can enhance customer trust, optimize payment processes, and minimize disputes.

Classification & transparency

always use the correct MCC; misclassification can lead to processing issues or account closures

• clearly display your hotel policies, cancellation terms, and fees on your website
• maintain transparent descriptors for customer transactions to avoid confusion

Fraud & chargeback reduction

implement 3DS or step-up authentication for transactions that appear risky (e.g., high-value bookings)

• use clear billing descriptors and provide instant booking confirmations via SMS or email
• log transaction details and customer interactions to support evidence in case of disputes

Payment acceptance optimization

offer multiple payment options (credit cards, debit cards, digital wallets) to cater to diverse customer preferences

• route transactions based on geographic location to optimize approval rates
• perform A/B testing with different PSPs to identify the most effective solutions

Operational discipline

monitor KPIs like booking conversion rates, chargeback ratios, and customer satisfaction scores

• conduct regular compliance audits to ensure adherence to industry standards and internal policies
• create dedicated processes for handling disputes with well-defined response timelines

Payouts & liquidity

maintain sufficient liquidity buffers to manage rolling reserves and unexpected demand fluctuations

• employ automated AML checks for managing withdrawals, particularly for large transactions
• keep a close eye on payout trends and be vigilant about any unusual withdrawal patterns

Business Scope & Examples

This MCC covers businesses primarily involved in the hospitality sector, specifically those offering accommodations and lodging services. Merchants classified under this category usually provide services or platforms where customers make payments for hotel stays, vacation rentals, and related hospitality experiences. The scope is dedicated to businesses that facilitate accommodations and related services.

Models

hotel chains and independent hotels

• vacation rental services (e.g., Airbnb, Vrbo)
• bed and breakfast establishments
• motels and inns
• resorts and spa facilities

Borderline cases

Hostel services — while similar to hotels, hostels often target budget travelers and may have different classification considerations.

• Event centers — facilities that primarily host events but also provide lodging; may require review depending on business focus.

Signals for correct classification

primary service is providing overnight accommodations

• business charges for stays or rentals directly linked to lodging
• supplementary services (like dining) are not the core offering