3585 Hungar hotels

Introduction

• What it is: This MCC represents businesses primarily engaged in providing lodging services, including hotels and similar establishments.
• Risk level: Medium — Potential for fluctuating occupancy rates increases risk.
• Acceptance difficulty: Medium — While many PSPs support hotels, comprehensive service offerings may lead to varying requirements.
• Typical business models: hotels; motels; resorts; inns; bed and breakfast establishments.
• For merchants: Expect moderate merchant discount rates (MDR); possible reserve requirements during peak seasons; thorough approval processes for new businesses.
• What PSPs expect: Proof of ownership; a detailed business plan; compliance with health and safety regulations.

Payment Insights & Benchmarks

Merchants in this MCC should plan for higher payment friction compared to standard e-commerce. Acceptance often depends on method mix, fraud controls, and PSP risk appetite.

Payment methods

Cards: commonly used, but may face declines based on geolocation and risk assessments.

• E-wallets: growing in popularity for both deposits and refunds, offering quicker transaction times.
• A2A transfers: useful alternatives that can reduce fees but may have longer processing times.
• Prepaid options: provide anonymity but can lead to chargeback challenges.
• Local payment methods: depending on the region, these can enhance conversion rates but might not be universally accepted.

Authentication & security

Strong customer authentication (SCA) measures are likely in place to mitigate fraud risks.

• Such measures can lower approval rates, especially for international transactions.
• Regular fraud assessments should track anomalies in transaction patterns and user behavior.

Benchmarks (indicative, not guaranteed)

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

• Rolling reserves: might average around 10-20%.
• Settlement cycles: often extend beyond 7 days, particularly for high-risk transactions.
• Chargeback ratios: can be noticeably elevated, requiring proactive management.
• Approval rates: typically lower for traditional cards, with alternative methods offering higher acceptance.

Key metrics to monitor

Authorization rates segmented by payment method and geographic region.

• Decline reason codes analyzed to identify patterns and improve acceptance.
• Chargeback ratios categorized by type to distinguish between fraud and consumer disputes.
• Average transaction value and frequency to assess risk and customer behavior.

Risk & Compliance

Merchants classified under MCC 3585 (HUNGAR HOTELS) face significant scrutiny due to the inherent risks associated with hospitality and travel services. Payment Service Providers (PSPs) and acquiring banks implement stringent measures to mitigate fraud and chargeback risks while ensuring compliance with Anti-Money Laundering (AML) and Know Your Customer (KYC) regulations.

Chargebacks & fraud

Common issues include friendly fraud, where customers claim unauthorized transactions after booking, and disputes over service levels not meeting expectations.

• Instances of carding and use of stolen credit cards for booking accommodations can also occur.
• Effective fraud mitigation tools include chargeback alert systems, behavioral analytics to detect anomalies in booking patterns, and real-time transaction monitoring.

AML/KYC expectations

Merchants are expected to implement robust identity verification processes, including government-issued ID checks, and monitor clients against sanctions lists during booking.

• Source-of-funds verification is necessary, particularly for large group reservations or high-value bookings.
• Manual review triggers can include multiple bookings with the same payment method, unusual travel patterns, or significant last-minute reservations.

Operational red flags

Lack of transparency regarding ownership and management structures can raise concerns; unclear business entities may deter PSPs.

• High volumes of cancellations or no-shows can signal potential fraudulent behavior or abuse of promotional offers.
• Absence of clear cancellation and refund policies can result in higher chargeback rates.
• Booking sources should be verified; reliance on unverified third-party websites may indicate potential fraud.

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 tourism authority licenses — required for operating hotels and accommodation services in most jurisdictions, providing regional compliance.

• Health and safety permits — necessary to ensure compliance with local health regulations, important in safeguarding guest satisfaction.
• Alcohol licenses — required in jurisdictions where hotels serve alcoholic beverages, with recognition varying by region.
• Fire safety and occupancy permits — essential for ensuring the hotel meets safety standards, and required by local governments.

Geo-restrictions

Countries with strict hotel regulations → potential for limitations in operational abilities or licensing issues for foreign businesses.

• In the EU, cross-border operations may face differing regulations from country to country, affecting acceptance and compliance.
• Certain regions may require compliance with specific local tourism and hospitality standards.

Certifications & audits

PCI DSS compliance for handling card transactions within hotel systems.

• Environmental certifications (e.g., Green Key, LEED) for sustainable operations, which may enhance marketability in eco-conscious markets.
• Safety audits by local authorities for health and environmental standards.
• Regular reviews for compliance with customer service regulations and hospitality standards, which may vary by jurisdiction.

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 across networks is largely similar, focusing on "hotels" and "lodging," but there are variations in how they view service types and booking methods. Certain networks place extra emphasis on the type of accommodations or travel services provided. Additionally, compliance checks for licenses and geographical restrictions commonly lead to denial if prerequisites are not met.

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 accommodation such as hotels and inns, use MCC 3585 correctly. Avoid classifications that might mislead about the nature of your services, as this can lead to compliance issues and potential penalties.

Best Practices for Merchants

Merchants operating under the HUNGAR HOTELS MCC must take proactive steps to ensure efficient operations and maintain a good standing with payment service providers. Adhering to best practices can significantly mitigate risk, enhance payment acceptance, and foster strong relationships with financial partners.

Classification & transparency

always utilize the correct MCC as using an incorrect code may lead to account restrictions or closure

• clearly present hotel policies, cancellation terms, and fees on your website
• maintain transparent communication about services offered and any geographic limitations

Fraud & chargeback reduction

implement 3DS or step-up authentication for high-risk bookings to enhance security

• utilize clear billing descriptors to minimize confusion for customers, thereby reducing disputes
• log booking events and correspondences to build strong cases for dispute representments

Payment acceptance optimization

support multiple payment methods (credit cards, local wallets, etc.) to cater to diverse customer preferences

• regularly test and optimize routing strategies based on geography, ensuring the best transaction success
• consider establishing separate MIDs for different types of accommodations to better manage payment requirements

Operational discipline

track key performance indicators, such as booking conversion rates, chargeback ratios, and customer satisfaction

• conduct routine compliance audits to ensure adherence to best practices and update policies as needed
• designate a team or individual responsible for dispute management, adhering to established service level agreements

Payouts & liquidity

maintain a liquidity buffer to accommodate potential rolling reserves or long settlement times associated with the industry

• implement automated compliance checks for withdrawals, particularly for high-volume transactions
• monitor payout activity and be alert to any unusual withdrawal patterns to prevent losses

Business Scope & Examples

This MCC covers businesses primarily involved in the hospitality sector, specifically those that operate hotels, motels, or other lodgings. Merchants categorized under this MCC usually provide accommodations and may include additional services such as dining and recreational facilities.

Models

full-service hotels (with restaurants and amenities)

• motels (providing basic accommodations)
• boutique hotels (offering unique themes or experiences)
• bed and breakfast establishments
• resort hotels (with leisure and recreational activities)
• extended-stay hotels (for long-term lodging)

Borderline cases

Vacation rentals — properties rented for short stays (e.g., Airbnb); typically classified differently, focusing on private rentals.

• Hostels — budget accommodations that may resemble hotels but cater to a different market segment and often have shared facilities.
• Service apartments — although they offer lodging, they may be classified under business services instead depending on operational model.

Signals for correct classification

primary business activity is renting out sleeping accommodations

• additional services offered (e.g., catering, leisure activities) are ancillary to lodging
• accommodations provided for travelers, tourists, or business professionals