3627 Extended stay america

Introduction

• What it is: This MCC covers establishments providing extended stay lodging services.
• Risk level: Medium — Higher exposure to fraud due to longer guest stays.
• Acceptance difficulty: Medium — Some PSPs may impose stricter requirements due to risk factors.
• Typical business models: extended stay hotels; corporate housing; serviced apartments; temporary lodging services.
• For merchants: Potential for moderate MDR; possible reserve requirements; ensure thorough verification processes.
• What PSPs expect: Proof of business operations; a detailed description of services offered; management of guest verification processes.

Payment Insights & Benchmarks

Merchants in the extended stay lodging sector should anticipate unique payment challenges compared to standard e-commerce. The nature of customer stays and payment methods may lead to increased operational complexities and risk assessments by payment service providers (PSPs).

Payment methods

Cards: commonly used, but often experience lower approval rates and higher fraud scrutiny due to potential for chargebacks.

• E-wallets: gaining traction among tech-savvy guests, offering quicker transactions but may incur different fees.
• Bank transfers: typically reliable for longer stays, but not universally accepted and reliant on customer familiarity.
• Corporate accounts: prevalent for business travelers, necessitating careful management of payments and approvals.
• Vouchers/prepaid methods: favored for privacy, but may limit access to some services and impact flexibility.

Authentication & security

Strong customer authentication (SCA) measures like 3DS are increasingly mandated.

• These measures enhance security but can lead to higher abandonment rates during the booking process.
• Monitoring for fraud should include patterns specific to long-term stays, such as duration and transaction frequency.

Benchmarks (indicative, not guaranteed)

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

• Rolling reserves: frequently required, potentially exceeding 10% for new businesses.
• Settlement times: typically longer, often ranging from 5 to 10 business days.
• Chargeback ratios: commonly elevated, especially for high-value transactions and extended stays.
• Approval rates: generally lower than average due to risk assessments associated with remote bookings.

Key metrics to monitor

Authorization rates across different payment methods and customer profiles.

• Decline reasons segmented by transaction types and fraud indicators.
• Chargeback ratios specifically tied to service disputes versus legitimate fraud cases.
• Average duration of stays and impact on payment processing timelines.

Risk & Compliance

Merchants under this MCC face various risks associated with prolonged customer stays and potential fraudulent activities. Given the nature of extended accommodation, PSPs and acquirers enforce stringent measures to manage chargebacks, fraud, and AML/KYC compliance effectively.

Chargebacks & fraud

Commonly see instances of friendly fraud, where customers dispute legitimate charges claiming they did not authorize the transaction.

• Extended stays may lead to increased bonus abuse, where individuals exploit promotional offers for illegitimate gains.
• Usage of stolen credit cards for bookings can be frequent; hence, chargebacks can rise without adequate verification.
• Effective fraud mitigation tools include transaction monitoring software and device fingerprinting to detect anomalies in booking patterns.

AML/KYC expectations

Strong customer identity verification (IDV) is essential, including government ID checks, especially for longer stays.

• Sanctions and PEP checks must be performed to ensure customers do not pose compliance risks.
• Source-of-funds verification is expected, particularly for unusual or high-value transactions, prompting manual reviews in specific scenarios like large cash payments.
• Manual review triggers may arise from multiple bookings from the same account over short periods or unusual payment methods like prepaid cards.

Operational red flags

Operations lacking transparency, such as unclear ownership or hidden operators for the business, raise concerns.

• High volumes of bookings from the same geographic area with minimal verification processes can alert PSPs.
• Lack of clear cancellation or refund policies can result in increased disputes and chargebacks.
• No established measures for monitoring guest behavior or enforcing a code of conduct might indicate possible risks in managing guests.

Onboarding Checklist

Merchants operating under the MCC code 3627 should prepare a comprehensive onboarding package before engaging with PSPs or acquirers. A thoroughly organized submission can significantly enhance approval odds and reduce processing times.

Legal & corporate documents

company registration and incorporation documents

• disclosure of beneficial owners (UBO) and corporate structure
• valid licenses for providing lodging or 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 booking cancellations and refunds
• description of antifraud measures and monitoring systems

Product & marketing

demo access or screenshots of the booking platform

• marketing strategy and overview of traffic sources (affiliates, SEO, PPC)
• geographic targeting details for the accommodation services
• KYC flow specifics, including identity verification methods and thresholds

Technical integration & security

overview of payment architecture with supported methods and processors

• details on SCA/3DS flows and tokenization practices
• PCI DSS compliance status and policies for data storage and handling

Operations

customer support setup (including language availability and hours)

• SLA for reservation handling and dispute resolution
• policies for deposit and cancellation terms; self-exclusion options
• internal processes for managing chargebacks and customer grievances

Regulation & Licensing

Licensing and certification are crucial for merchants in this MCC, as payment service providers (PSPs) and acquirers require proof of compliance before onboarding. Recognition of licenses depends significantly on the merchant's jurisdiction and the markets they serve.

Operator licenses

Hotels and Motels License — typically required at the local level for operating extended stay accommodations, ensuring compliance with health and safety regulations.

• Business License — often required by local jurisdictions, allowing entities to conduct operations legally within a specific area.
• Alcohol License — necessary if the establishment serves alcoholic beverages; recognition may vary based on state or local regulations.
• Fire Safety License — required in many jurisdictions, ensuring that accommodations meet fire safety codes and regulations.
• Some states may require specific permits for handling food and beverages, especially for dining facilities within the lodging operations.

Geo-restrictions

Local zoning laws can restrict the establishment of new extended stay facilities in certain areas.

• Some states may impose longer approval processes based on the proximity to schools or residential areas.
• International markets may have specific lodging regulations affecting entry for foreign-based operators.
• Local regulations can lead to variations in the types of services that can be offered within different jurisdictions.

Certifications & audits

Health and safety inspections to ensure compliance with local guidelines.

• Fire safety audits to verify compliance with applicable codes and regulations.
• PCI DSS compliance, especially if payments for stays are processed through a centralized system.
• Regular inspections for food safety if serving food and beverages is part of the service offerings.
• Local regulatory compliance audits to maintain necessary operating permits and licenses.

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 share a common focus on lodging, the terminology varies slightly, with “extended stay” highlighted in different contexts. Some networks may impose separate licensing requirements based on the business model or duration of stay, potentially affecting approval. Typical denial reasons include insufficient licensing documentation, issues with the type of service offered, or not meeting geographic eligibility criteria.

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 caters to guests for extended periods, it typically falls under MCC 3627. Misclassifying your business can lead to compliance issues, including potential account closures or financial penalties. Always ensure to choose the appropriate code that best reflects your services.

Best Practices for Merchants

Merchants operating under the Extended Stay America MCC (3627) need to prioritize effective payment management and customer service to foster trust and reduce risks. By adhering to the following best practices, merchants can enhance their payment acceptance and operational efficiency.

Classification & transparency

always use the correct MCC; improper classification can lead to account termination

• clearly display accommodation policies, fees, and amenities on your website
• maintain transparency in pricing and billing descriptors to enhance customer trust

Fraud & chargeback reduction

implement 3DS or step-up flows for transactions deemed high-risk, such as large bookings or unusual geographic patterns

• ensure billing descriptors are recognizable and promptly confirm bookings via email or SMS
• keep detailed logs of bookings and customer interactions to provide evidence in case of disputes

Payment acceptance optimization

offer diverse payment methods, including credit/debit cards, digital wallets, and payment plans

• test different payment service providers (PSPs) to identify the most suitable for your customer base
• consider using separate Merchant Identification Numbers (MIDs) for various booking platforms or promotional offers

Operational discipline

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

• conduct regular compliance audits to ensure adherence to internal policies and industry standards
• designate team members responsible for handling disputes to ensure timely resolutions

Payouts & liquidity

establish liquidity buffers to accommodate potential rolling reserves or delayed payouts

• automate anti-money laundering (AML) checks for withdrawals to mitigate risks
• closely track withdrawal patterns and payment cycles to maintain financial stability

Business Scope & Examples

This MCC covers businesses providing extended-stay lodging accommodations. Merchants classified under this category usually offer rooms or suites for guests planning to stay for an extended period, typically catering to travelers, business professionals, and families. The scope includes lodging that offers amenities and services allowing for longer-term stay solutions.

Models

extended stay hotels

• serviced apartments
• corporate housing providers
• vacation rentals with extended stay options
• boarding houses

Borderline cases

Short-term vacation rentals — properties rented for less than 30 days that may not provide the same services; typically classified separately.

• Traditional hotels — establishments designed primarily for short-term stays; differ in service offerings and target customers.

Signals for correct classification

guests can book rooms for multiple weeks or months

• accommodations include kitchen facilities and laundry services
• business model is oriented toward long-term stay rather than transient visitors