3642 Novotel hotels

Introduction

• What it is: This MCC covers businesses primarily engaged in providing lodging and accommodation services through Novotel Hotels.
• Risk level: Medium — These establishments may face moderate risk due to seasonal fluctuations in occupancy.
• Acceptance difficulty: Medium — While generally accepted, some payment processors may impose specific conditions.
• Typical business models: hotels; resorts; conference centers; integrated accommodations with dining services.
• For merchants: Expect medium MDR rates; possible cash reserves; approval may take longer during peak seasons.
• What PSPs expect: Business registration; proof of compliance with health and safety regulations; details on room capacity and services offered.

Payment Insights & Benchmarks

Merchants in this MCC should plan for varied payment experiences that could impact revenue and customer satisfaction. The travel and hospitality industry has unique payment characteristics that influence acceptance rates and chargebacks.

Payment methods

Cards: frequently used, but may face higher scrutiny, especially for international bookings.

• E-wallets: popular for bookings, offering customer convenience but varying approval rates.
• Bank transfers: used for corporate clients but often slower and less convenient for individual travelers.
• Vouchers and loyalty points: effective for attracting repeat customers but require distinct management strategies.

Authentication & security

Strong Customer Authentication (SCA) measures such as 3DS are generally required, especially for online bookings.

• Enhanced security may improve confidence but can lead to increased friction at checkout.
• Monitoring for fraud is crucial, with particular attention to booking patterns and customer behaviors.

Benchmarks (indicative, not guaranteed)

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

• Rolling reserves: commonly requested to mitigate chargeback risks, often above average.
• Settlement periods: may extend beyond 7 days, especially for complex bookings.
• Chargeback ratios: often elevated due to cancellation policies and "friendly fraud".
• Approval rates: can be lower, particularly for card-not-present transactions compared to traditional retail.

Key metrics to monitor

Authorization rates segmented by channel (online vs. in-person) and payment method.

• Reasons for payment declines, with a focus on fraud detection and chargeback triggers.
• Chargeback rates and types to identify trends and areas for improvement.
• Customer booking patterns to better understand potential fraud risks and service adjustments.

Risk & Compliance

Merchants under the MCC 3642 (Novotel Hotels) face particular risks related to chargebacks, fraud, and compliance with AML/KYC regulations. Given the nature of transactions in the hospitality industry, PSPs and acquirers require diligent risk management practices to mitigate potential losses and ensure compliance.

Chargebacks & fraud

Friendly fraud is common, with customers disputing legitimate charges claiming they did not authorize the transactions.

• Fraudulent bookings using stolen cards or voucher misuse can occur, particularly during peak seasons or promotional events.
• Mitigation tools include velocity checks, chargeback alerts, and device fingerprinting to verify customer authenticity and transaction legitimacy.

AML/KYC expectations

Rigorous identity verification processes expected, including government-issued ID checks and confirmation of the guest's residency.

• Sanctions and PEP (Politically Exposed Persons) checks are mandatory, especially for high-value reservations.
• Manual review triggers include unusual booking patterns, high-risk geographical origins, or reservations made without a valid payment method.

Operational red flags

Lack of transparency regarding ownership, particularly in franchises or while using third-party booking agents.

• Unclear cancellation and refund policies that could lead to customer disputes or chargeback claims.
• High volumes of last-minute bookings or frequent booking changes that could raise suspicion among PSPs.
• Inadequate checks on guests' payment legitimacy or failure to verify guest names against payment methods.

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 — generally required for operation within specific jurisdictions, these licenses ensure compliance with local regulations.

• Hotel and lodging licenses — issued by city or state authorities, ensuring adherence to health and safety regulations.
• Alcohol licenses — necessary for hotels that serve alcohol; requirements can vary widely by location.
• Tourism board certifications — in some regions, accommodations must be certified by local tourism agencies to be recognized as legitimate establishments.
• Some countries may require special licenses for hosting events or offering additional services like spas or gaming.

Geo-restrictions

Some regions have specific regulations governing accommodation services that could vary based on local laws.

• Certain countries may restrict foreign ownership of hotels, impacting how international merchants can operate.
• Hotels in highly regulated areas may face stricter operational laws, affecting market entry for new merchants.

Certifications & audits

PCI DSS compliance for handling card payments within hotel facilities.

• Health and safety inspections to ensure guest safety standards are met.
• Fire safety compliance audits, especially in multi-story accommodations.
• Environmental certifications may be necessary for eco-friendly hotels to appeal to certain customer segments.

Official Definitions & Network Comparisons

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

Explanation:

The definitions across these networks share similar terminology (e.g., "hotels" and "lodging") but may differ in specificity regarding legal and licensing requirements. Some networks require additional documentation or have stricter criteria based on the region of operation. Rejections often occur due to inadequate licensing, geographical limitations, or a problematic chargeback record.

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 lodging, use MCC 3642. Avoid misclassifying your services under other codes that do not accurately represent your business type to prevent payment processing issues and potential penalties.

Best Practices for Merchants

Merchants operating within the Novotel Hotels MCC must prioritize effective payment management and operational vigilance. Adhering to the best practices outlined below can significantly enhance payment acceptance, mitigate risks, and foster positive relationships with payment service providers (PSPs).

Classification & transparency

always utilize the correct MCC to avoid account restrictions or closures due to misclassification

• prominently display hotel policies, geographic service areas, and any relevant licensing information on your website
• provide clear and accurate billing descriptors to minimize confusion for customers

Fraud & chargeback reduction

integrate 3DS or step-up authentication for higher-risk transactions, such as large bookings or international guests

• utilize transparent billing descriptors and send instant booking confirmations via email/SMS to verify transactions
• diligently log all transactions and customer interactions to create a robust basis for dispute resolution

Payment acceptance optimization

offer multiple payment methods (credit cards, digital wallets, and local payment options) to accommodate diverse customer preferences

• analyze payment routing by geography and provider performance, and adjust strategies based on A/B testing results
• consider establishing separate merchant IDs (MIDs) for different service types, such as leisure vs. business, to tailor processing

Operational discipline

monitor KPIs like authorization rates, chargeback ratios, and customer lifetime value to gauge operational effectiveness

• routinely conduct compliance audits to ensure policies are up-to-date and effective, accompanied by non-disruptive test transactions
• appoint a dedicated team member or department to handle disputes efficiently, incorporating defined response timeframes

Payouts & liquidity

maintain a financial buffer to manage rolling reserves required by processors or to cover unexpected expenses

• automate anti-money laundering (AML) checks for higher-value withdrawals, especially under specific thresholds
• track payout speed and remain vigilant for any unusual withdrawal patterns that may signal potential fraud

Business Scope & Examples

This MCC covers businesses that primarily provide lodging and accommodation services, specifically hotels and similar establishments. Merchants classified under this category usually offer services where customers make payments for booking rooms, dining, and other related amenities associated with staying overnight.

Models

full-service hotels

• limited-service hotels
• boutique hotels
• resorts (with accommodation services)
• vacation rentals (operated by a larger hotel chain)

Borderline cases

Hostels — budget shared accommodation that may not offer the same range of services; sometimes categorized separately.

• Vacation timeshares — sales or rentals of timeshare properties; can overlap but typically distinct from traditional hotel offerings.
• Short-term rental platforms — services like Airbnb can vary in classification based on the nature of the accommodation offered.

Signals for correct classification

primary service is the rental of rooms for overnight stays

• ancillary services include dining, event spaces, or recreational activities
• operations are part of a recognized hotel brand or chain