3674 Rantasipi hotels

Introduction

• What it is: This MCC is designated for establishments primarily providing lodging services for guests.
• Risk level: Medium — Hotels can be subject to chargebacks and fraud, affecting their risk profile.
• Acceptance difficulty: Medium — While many PSPs support hotels, additional documentation may be required.
• Typical business models: Hotels; motels; holiday resorts; boutique accommodations; extended stay facilities.
• For merchants: Expect moderate to high MDR; potential for reserves during peak seasons; thorough approval processes for new merchants.
• What PSPs expect: Valid business license; proof of ownership or management; detailed operational information on the services offered.

Payment Insights & Benchmarks

Merchants in this MCC should plan for varying payment acceptance and potential higher chargeback rates compared to standard e-commerce. Understanding payment dynamics can help in managing costs and reducing friction in transactions.

Payment methods

Cards: widely accepted but may face higher decline rates depending on issuer and customer location.

• E-wallets: gaining popularity for convenience, but users may have varying levels of success based on funding sources.
• Bank transfers: effective for larger transactions but can lead to longer settlement times.
• Loyalty points and vouchers: used in many hospitality settings to enhance customer engagement, though not universally accepted.

Authentication & security

3DS and strong customer authentication are often implemented, especially for card transactions.

• Enhanced security measures help reduce fraud but may increase customer friction during the checkout process.
• Monitoring for unusual transaction patterns is crucial given the high-value nature of hotel bookings.

Benchmarks (indicative, not guaranteed)

MDR: typically higher than standard e-commerce due to the nature of the hospitality industry.

• Rolling reserves: can be common, especially for high-ticket bookings, potentially reaching double digits.
• Settlement cycles: may take longer, often exceeding 7 days due to processing and potential holds on funds.
• Chargeback ratios: likely above industry averages, especially during peak travel seasons.
• Approval rates: card transactions might see lower approval rates compared to alternative methods like e-wallets.

Key metrics to monitor

Transaction approval and decline rates by payment method.

• Chargeback rates and reasons, focusing on fraud and customer service issues.
• Average booking value compared to payment method trends.
• Customer satisfaction and feedback linked to payment experience.

Risk & Compliance

Merchants under this MCC are closely scrutinized due to elevated financial and reputational risks. PSPs and acquirers typically apply stricter controls, expecting merchants to proactively address fraud, chargebacks, and AML/KYC compliance.

Chargebacks & fraud

High incidence of friendly fraud (“I didn’t authorize this transaction”), particularly from customers disputing legitimate reservations.

• Common abuse patterns include making reservations with stolen credit cards and canceling them for refunds.
• Mitigation tools include transaction monitoring, chargeback alert systems, and behavioral analytics to identify unusual booking patterns.

AML/KYC expectations

Strong customer identity verification (IDV) is essential, including verification of guests' identities upon check-in.

• Sanctions and politically exposed person (PEP) checks must be conducted for all transactions above a certain threshold.
• Manual review triggers include large or suspicious booking volumes, irregular payment methods, and frequent last-minute changes.

Operational red flags

Lack of transparency regarding ownership or operators, especially in franchise or partnership scenarios.

• Booking funnels leading from restricted locations or unverified affiliates.
• Inadequate cancellation and refund policy disclosures, creating potential disputes.
• Absence of mechanisms for identity verification at check-in, increasing risks of fraudulent bookings.

Onboarding Checklist

Merchants under the MCC 3674 (Rantasipi Hotels) 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 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 handling guest payments
• description of antifraud setup and measures

Product & marketing

demo access or screenshots of the hotel booking platform

• marketing plan detailing traffic sources (OTAs, affiliates)
• geographic targeting information and target customer profiles

Technical integration & security

payment architecture overview including supported payment methods

• description of SCA/3DS flows and tokenization processes
• PCI DSS compliance status and data storage policy

Operations

customer support structure (staffing, hours of operation)

• SLA for handling reservations, cancellations, and disputes
• deposit and cancellation policies; guest self-service options
• internal procedures for managing chargebacks and guest complaints

Regulation & Licensing

Licensing and certification are crucial for merchants in this MCC, as they ensure compliance with local regulations and foster trust with payment service providers (PSPs). Recognition of licenses can vary greatly depending on the merchant’s jurisdiction and the markets they target.

Operator licenses

Local business licenses — required in most jurisdictions to operate legally. These licenses vary based on local laws.

• Health and safety permits — important for hotels and restaurants to ensure compliance with health regulations.
• Liquor licenses (if applicable) — necessary for establishments that serve alcohol, with regulations varying by region.
• Tourism-specific licenses — some regions require additional permits for accommodations aimed at tourists.
• License recognition by PSPs depends on the issuer's jurisdiction and operational scope.

Geo-restrictions

Some countries impose restrictions on specific types of accommodations for foreign entities or require local partnerships.

• Regions may have distinct regulations regarding hotel operations, affecting the acceptance of foreign licenses.
• Certain geographical locations have strict health and safety regulations that can impact hotel operations.

Certifications & audits

PCI DSS compliance for handling payment card data securely.

• Hospitality industry audits that assess service quality and compliance with health standards.
• Environmental certifications (e.g., Green Key) may be required or beneficial for eco-friendly hotels.
• Annual health and safety inspections to maintain operational licenses and permits.

Official Definitions & Network Comparisons

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

Explanation:

While each network defines the MCC with a focus on lodging, the terminology and specific policies can vary, impacting merchant classification and acceptance processes. Notably, classifications might be influenced by whether the establishment operates as a luxury hotel or a budget lodging service. Common onboard denial reasons include a lack of proper lodging licenses, questions regarding the type of services offered, and regional operational discrepancies.

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 focuses on providing overnight accommodations, use MCC 3674. Avoid adopting other codes that do not accurately represent your primary service to minimize compliance risks and potential chargeback issues.

Best Practices for Merchants

Merchants in the hotel and lodging industry face unique challenges, including high customer expectations and potential chargebacks. Implementing best practices can help enhance customer satisfaction, improve payment processing efficiency, and reduce the risk of disputes.

Classification & transparency

always use the correct MCC; misclassification can lead to increased scrutiny and potential account issues

• clearly outline cancellation policies, terms of service, and payment procedures on your website
• ensure business models and transaction descriptors are transparent to customers

Fraud & chargeback reduction

implement 3DS or step-up authentication for bookings made with high-risk profiles, such as last-minute reservations

• utilize clear billing descriptors that will help customers recognize charges and reduce confusion
• log transaction details and guest interactions to support evidence collection for any disputes

Payment acceptance optimization

support various payment methods (credit cards, mobile wallets, online booking platforms) to cater to diverse customer preferences

• route transactions by geography or payment method to optimize acceptance rates and costs
• conduct A/B testing with different payment service providers to identify the best options for your business

Operational discipline

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

• conduct regular compliance audits to ensure adherence to industry standards and internal policies
• establish a dedicated team to manage disputes and chargebacks, setting clear response timelines

Payouts & liquidity

maintain adequate liquidity buffers to manage rolling reserves and potential refunds efficiently

• automate anti-money laundering (AML) checks for customer withdrawals, especially for larger transactions
• closely monitor payout processes and identify any unusual withdrawal patterns that could indicate fraudulent activity

Business Scope & Examples

This MCC covers businesses related to hotel and lodging services where guests can stay overnight or for extended periods. Merchants classified under this category usually provide accommodations, often accompanied by additional services such as dining, leisure activities, or event hosting.

Models

full-service hotels (offering rooms, dining, and amenities)

• budget hotels (providing essential lodging services)
• resorts (combining accommodation with recreational facilities)
• motels (offering convenient, roadside lodging)
• bed and breakfast establishments (providing overnight stays with breakfast)
• vacation rentals (houses or apartments offered for short-term lodging)

Borderline cases

Hostels — generally budget-friendly accommodations with shared rooms; sometimes classified separately depending on amenities offered.

• Serviced apartments — offer hotel-like services but cater to long-term stays; clear classification may depend on business model.

Signals for correct classification

primary business focus is on providing overnight accommodations

• on-site amenities and services available to guests
• bookings are typically made for single or multiple nights for different guests