3622 Merlin hotels

Introduction

• What it is: This MCC code encompasses establishments that offer lodging services, including hotels and resorts.
• Risk level: Medium — Associated with potential chargebacks and cancellations.
• Acceptance difficulty: Medium — Requires robust fraud detection systems due to high transaction values.
• Typical business models: hotels; boutique inns; resorts; vacation rentals; hostels.
• For merchants: Expect moderate MDR; possible reserve requirements for chargebacks; clear policies on cancellations can facilitate smoother operations.
• What PSPs expect: Valid business registration; proper licensing for hospitality services; detailed service offerings and customer policies outlined.

Payment Insights & Benchmarks

Merchants in the hotel industry (MCC 3622) should prepare for unique payment challenges due to high average transaction values and increased fraud risk. Understanding these factors can help manage costs and improve the payment experience for customers.

Payment methods

Cards: widely accepted; however, regulatory filters can lead to higher decline rates.

• E-wallets: increasingly popular for customer convenience but may involve higher fees.
• Direct bank transfers: useful for large transactions, yet can delay settlement.
• Vouchers and gift cards: provide options for customers without credit cards, but can complicate reconciliation.

Authentication & security

Strong Customer Authentication (SCA) is often required, especially for online bookings.

• These layers can improve security but may also negatively impact conversion rates.
• Regular monitoring for suspicious activity is crucial given the high value of transactions.

Benchmarks (indicative, not guaranteed)

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

• Rolling reserves: often required to mitigate chargeback risks, potentially in the mid-single digits.
• Settlement time: usually longer than average (up to 10 days), especially for international transactions.
• Chargeback ratios: potentially higher than other industries, reflecting the nature of travel-related disputes.
• Approval rates: often lower than average for card transactions, with alternative methods sometimes performing better.

Key metrics to monitor

Authorization rates segmented by payment method and source.

• Volume and reasons for declined transactions.
• Chargeback trends by cause (e.g., fraud vs. customer dissatisfaction).
• Average transaction value to assess risk exposure.

Risk & Compliance

Merchants under the MCC 3622 (MERLIN HOTELS) face heightened scrutiny due to the potential for financial risks and reputational damage. PSPs and acquirers often implement robust measures to mitigate fraud, chargebacks, and ensure compliance with AML/KYC regulations, expecting merchants to be proactive in these areas.

Chargebacks & fraud

Frequent instances of friendly fraud, where customers claim they did not authorize transactions, leading to chargebacks.

• Misuse of promotional offers and loyalty bonuses can result in abuse, such as bonus abuse among returning customers.
• Common mitigation tools include transaction monitoring systems, velocity checks to manage rapid booking patterns, and device fingerprinting to track user activity across devices.

AML/KYC expectations

Strong identity verification processes are expected, including secure ID checks and real-time sanctions screening.

• Monitoring of source-of-funds and ensuring that payment methods are legitimate, especially for large transactions.
• Manual review triggers can include irregular booking patterns or customers using multiple credit cards, unusual geolocations, or high-risk payment methods.

Operational red flags

Lack of transparency in ownership or unclear operational practices in hotel listings can raise alarms with PSPs.

• Traffic sourced from dubious online platforms or unverified referral programs may indicate potential fraud attempts.
• Inadequate customer service support for booking disputes or unclear refund policies may deter trust and invite scrutiny.
• Failure to implement responsible gaming policies or consumer protections regarding booking and cancellations can also raise flags during compliance checks.

Onboarding Checklist

Merchants in the hotel and accommodation sector, such as those represented by the MCC 3622, should compile a comprehensive onboarding package for submission to PSPs or acquirers. A thorough and organized set of documents significantly enhances the likelihood of swift approval.

Legal & corporate documents

company registration and incorporation documents

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

Financials & risk management

recent financial statements and cashflow forecasts

• liquidity or reserve model for managing customer deposits
• description of antifraud setup and risk management tools

Product & marketing

demo access or screenshots of the live booking platform

• overview of marketing strategies and traffic sources (direct, referral, OTA)
• geographic targeting information for marketing campaigns
• KYC flow details, including verification processes for guest identities

Technical integration & security

payment architecture overview with supported payment methods/providers

• description of SCA/3DS flows and processes for handling payment retries
• PCI DSS compliance status and policies for data storage and protection

Operations

customer support setup (availability of multilingual support and hours)

• SLA for handling disputes and chargebacks
• booking, cancellation, and refund policies; self-exclusion mechanisms for promotions
• internal procedures for managing chargebacks and customer complaints

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 — necessary for operating legally within specific jurisdictions.

• Health and safety permits — often required to ensure compliance with local regulations for hospitality and accommodation services.
• Alcohol licensing — if applicable, required for the sale of alcoholic beverages on the premises.
• Fire department permits — necessary for establishments to operate safely and legally.
• Tourism and hospitality licenses — can be mandated by local or regional governments to promote compliance within the travel industry.

Geo-restrictions

Regions with strict accommodation regulations may block new entrants without proper licensing.

• Certain countries may place restrictions on foreign ownership of hotel properties, impacting ability to operate.
• Local regulations often vary significantly, affecting what licenses are recognized and accepted.

Certifications & audits

PCI DSS compliance for handling customer payment data securely.

• Health and safety audits to ensure facilities meet local requirements.
• Environmental certifications that may be mandated by local governments.
• Annual reviews for hospitality standards, focusing on cleanliness, service, and safety measures.

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 across networks generally align on hotel and lodging services, terminology nuances can subtly shift classification standards. Specific network requirements may necessitate documented proof of hotel affiliations or licensing. Common denial reasons include lack of proper certification, mismatched business classifications, and inconsistencies in geographic service declarations.

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 operation is providing overnight lodging, ensure you classify your business under MCC 3622. Misclassifying your business under unrelated categories can lead to compliance issues and possible account termination.

Best Practices for Merchants

Merchants operating under the MCC 3622 (MERLIN HOTELS) should be proactive in managing their payment operations and minimizing risks associated with transactions. The following best practices are essential for ensuring a smooth operation and fostering healthy relationships with payment service providers.

Classification & transparency

always use the correct MCC to avoid classification issues that may lead to penalties or account closures

• clearly display operational policies, including terms and conditions, on your website to enhance transparency
• ensure that all business models and payment descriptors accurately reflect the services offered

Fraud & chargeback reduction

implement 3DS or step-up authentication for transactions at a higher risk of fraud (e.g., international bookings, large group reservations)

• provide clear billing descriptors and send immediate booking confirmations via email or SMS to minimize confusion
• maintain event logs to document transactions and customer interactions, aiding in disputing chargebacks

Payment acceptance optimization

diversify payment methods by accepting credit/debit cards, digital wallets, and local payment options to accommodate various customer preferences

• optimize transaction routing based on customer location, offering the best-performing payment processors for specific geographies
• consider using separate merchant IDs (MIDs) for different types of accommodations or services to meet varying payment scheme requirements

Operational discipline

establish and monitor KPIs such as booking conversion rates, chargeback ratios, and customer dissatisfaction metrics

• conduct regular compliance audits to ensure adherence to internal policies and address any operational gaps
• designate a specific team or individual responsible for managing disputes to ensure timely and effective resolutions

Payouts & liquidity

maintain adequate liquidity buffers to manage potential rolling reserves and accommodate the impact of extended payout timelines

• implement automated AML checks on withdrawal requests, especially those reaching significant thresholds, to detect suspicious activities
• regularly review payout processes to optimize speed and efficiency while ensuring compliance and security

Business Scope & Examples

This MCC covers businesses associated with hotels and related accommodations. Merchants classified under this category typically offer lodging services, making it easy for travelers to book stays for various purposes. The scope includes various types of accommodations, from luxury hotels to budget inns.

Models

luxury hotel chains

• budget and economy hotels
• boutique hotels
• extended stay and serviced apartments
• hostels and backpacker accommodations

Borderline cases

Vacation rentals — properties listed on platforms like Airbnb; may be classified separately unless operated professionally as a hotel.

• Bed and breakfast establishments — smaller hospitality services that may sometimes fall outside standard hotel classifications.

Signals for correct classification

business primarily offers lodging with standardized services and amenities

• booking services are centralized and manage multiple accommodations
• customer check-in processes resemble traditional hotel operations