3573 Sandman hotels

Introduction

• What it is: This MCC covers lodging and accommodation services provided by hotels and similar establishments.
• Risk level: Medium — Higher than average due to potential for chargebacks.
• Acceptance difficulty: Medium — While common, specific underwriting may be needed based on local market conditions.
• Typical business models: hotels; resorts; inns; motels; bed and breakfasts.
• For merchants: Expect moderate MDR rates; may require higher reserves; chargeback monitoring is important.
• What PSPs expect: Detailed business plan; proof of hospitality licenses; clear booking and cancellation policies on the website.

Payment Insights & Benchmarks

Merchants in this MCC should plan for varied payment dynamics, influenced by customer preferences and operational logistics within the hospitality industry. Understanding these insights can help optimize revenue and manage payment-related challenges effectively.

Payment methods

Cards: commonly accepted, but may face higher decline rates due to fraud checks and customer disputes.

• E-wallets: increasingly popular for ease of booking and quick settlements.
• Direct bank transfers: utilized for corporate clients, but can involve longer processing times.
• Gift cards: a growing choice for guests, allowing for flexible payment options.
• Contactless payments: gaining traction in catering to health-conscious customers.

Authentication & security

Enhanced authentication methods (3DS and SCA) are typically present to safeguard transactions.

• These measures reduce unauthorized transactions but may introduce friction at checkout.
• Continuous fraud monitoring strategies are essential to combat both genuine fraud and customer-related disputes.

Benchmarks (indicative, not guaranteed)

MDR: generally higher than standard e-commerce due to risk factors in the hospitality sector.

• Rolling reserves: often required, typically around 5-15%.
• Settlement cycles: may extend beyond standard e-commerce norms, frequently taking 5-10 days.
• Chargeback ratios: higher than average, requiring vigilance in managing customer satisfaction and clear policies.
• Approval rates: notably lower for credit cards while potentially higher for digital wallets.

Key metrics to monitor

Transaction success and decline rates according to payment method and channel.

• Customer disputes and chargebacks categorized by type to understand root causes.
• Trends in payment preferences over time to adapt offerings accordingly.
• Average booking values and lead times for guest reservations.

Risk & Compliance

Merchants categorized under the MCC 3573 (Sandman Hotels) face unique risks related to payment processing, customer interactions, and regulatory compliance. PSPs and acquirers focus on these factors to mitigate potential financial losses and protect their reputations.

Chargebacks & fraud

Common issues include friendly fraud (customers claiming “I didn’t authorize this transaction”) and reservation cancellations or modifications without proper notifications, leading to disputes.

• High occurrence of fraud involving stolen credit cards for booking and no-shows that result in chargebacks.
• Effective mitigation tools include chargeback alerts, reservation confirmation emails, and enhanced transaction monitoring.

AML/KYC expectations

Robust identity verification processes during check-in, ensuring guest IDs match booking details, alongside sanctions checks for all guests.

• Source-of-funds verification is crucial, especially for high-value bookings, with scrutiny applied to unusual payment patterns.
• Manual review triggers include cash payments for significant transactions, last-minute bookings from new accounts, and guests presenting multiple bookings under different names.

Operational red flags

Lack of clarity regarding property management and ownership can raise transparency concerns (e.g., hidden operators).

• High volumes of last-minute cancellations or no-shows can be alarming indicators of potential fraud.
• Insufficient customer service protocols to resolve disputes quickly may lead to increased chargebacks.
• Inadequate policies around refunds and dispute resolution can contribute to negative customer experiences and regulatory scrutiny.

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
• 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
• 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

Local business licenses — required for compliance with municipal regulations where the hotel operates.

• Health and safety permits — necessary to ensure compliance with local health regulations.
• Alcohol service license — needed if the hotel offers bar services, which must align with local liquor laws.
• Tourism licenses — some jurisdictions may require specific certifications for hotels operating in tourist areas.
• Hotel industry certifications (e.g., AAA, Forbes) — while not legally required, these can enhance reputation and trustworthiness.

Geo-restrictions

Countries may impose strict regulations regarding foreign-owned accommodations, impacting operation viability.

• Certain regions may have zoning laws that restrict the establishment of new hotels in specific neighborhoods.
• In cities with existing hotel caps or regulations, new licenses may be hard to obtain.

Certifications & audits

PCI DSS compliance for handling card transactions and ensuring data security.

• Health and safety inspections to verify operational compliance with public health standards.
• Environmental audits for sustainability practices (e.g., green certifications).
• Regular quality assurance audits to maintain brand standards and guest experience.

Official Definitions & Network Comparisons

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

Explanation:

While all networks recognize hotels and motels, the terminology and specific categories can vary, affecting how businesses are classified. Networks might also have different requirements for documentation, particularly for chains versus independent establishments. Common reasons for denial include lack of operational proof, non-compliance with geographic regulations, and insufficient transparency in pricing or services offered.

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 is providing overnight lodging, ensure you use MCC 3573. Misclassifying your business under unrelated MCCs can lead to compliance issues and potential penalties. Always choose the most specific code that accurately reflects your services to avoid complications.

Best Practices for Merchants

Merchants under the MCC 3573, specifically in the hospitality sector like Sandman Hotels, must navigate a competitive landscape while focusing on risk management and operational efficiency. Implementing the following practices can enhance acceptance rates and build a stronger relationship with payment service providers (PSPs).

Classification & transparency

always use the correct MCC; misclassification can lead to account limitations

• clearly communicate your hotel policies, including cancellation and refund policies, on your website
• ensure business models and billing descriptors reflect the services provided transparently

Fraud & chargeback reduction

implement 3DS or step-up authentication for online bookings or higher-value transactions

• provide clear billing descriptors and confirmation emails to enhance transparency and reduce chargebacks
• maintain detailed logs of customer interactions and transaction histories for effective dispute management

Payment acceptance optimization

support multiple payment methods (credit cards, digital wallets, etc.) to cater to a diverse clientele

• monitor and route transactions by geographical location to maximize approval rates
• consider separate Merchant IDs (MIDs) for different hotel properties or services to streamline reporting and compliance

Operational discipline

track key performance indicators (KPIs) such as payment approval rates, chargeback ratios, and customer feedback

• conduct regular compliance reviews and update operational policies as needed to stay current with industry standards
• designate a team or individual to handle disputes and ensure timely responses to any chargebacks or inquiries

Payouts & liquidity

maintain liquidity buffers to accommodate rolling reserves required by PSPs for the hospitality industry

• automate anti-money laundering (AML) checks for payouts, particularly for high-value transactions
• keep an eye on payout cycles and adjust operational strategies to manage cash flow effectively

Business Scope & Examples

This MCC covers businesses that operate primarily in the lodging and accommodation sector. Merchants classified under this category usually provide services or platforms where customers can reserve and pay for overnight stays in various types of accommodations, ranging from hotels to motels, inns, and resorts.

Models

full-service hotels with full amenities

• budget hotels and motels
• boutique hotels offering unique lodging experiences
• resorts with recreational facilities
• bed and breakfast establishments
• vacation rentals and serviced apartments

Borderline cases

Hostels — while they provide overnight accommodations, their shared-living model may vary from traditional hotel services, potentially leading to different classifications.

• Time-share properties — these units are often operated under different business rules and could have unique implications for classification.

Signals for correct classification

business provides overnight accommodations as the primary service

• customer payments are primarily for lodging and associated amenities
• reservations can be made online or over the phone for specific date ranges