3691 Dillon inns

Introduction

• What it is: This MCC covers businesses that operate inns and lodging facilities, typically including terms like bed and breakfasts.
• Risk level: Medium — These businesses might face risks associated with fluctuations in occupancy rates.
• Acceptance difficulty: Medium — The acceptance process can be moderate due to potential chargeback risks from guests.
• Typical business models: inns; guesthouses; bed and breakfasts; boutique hotels; vacation rentals.
• For merchants: Expect moderate processing fees; some providers may require reserves; approval processes may vary.
• What PSPs expect: Proof of business location; documentation of occupancy rates; a clear cancellation policy on the website.

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: frequently evaluated based on guest profile and booking source, potentially leading to lower approval rates.

• E-wallets: effective for quick transactions but may have limited adoption among travelers.
• Bank transfers: used mainly for larger reservations, can involve longer processing times.
• Mobile payments: gaining popularity, but compatibility may vary across platforms.

Authentication & security

Strong customer authentication (SCA) measures, such as 3DS, are often required.

• These measures can reduce fraud but may also lead to increased cart abandonment.
• Continuous fraud monitoring is essential due to the hospitality industry's susceptibility to various types of fraud.

Benchmarks (indicative, not guaranteed)

MDR: often higher than standard e-commerce rates.

• Rolling reserves: may be implemented, typically around double digits.
• Settlement cycles: usually extended, often exceeding 7 days.
• Chargeback ratios: likely to be above retail and standard e-commerce averages.
• Approval rates: comparatively lower, especially for card transactions, while e-wallets may fare better.

Key metrics to monitor

Payment authorization rates segmented by method and source.

• Common decline reasons to identify patterns and improve acceptance.
• Chargeback ratios, distinguishing between genuine fraud and disputes related to service.
• Average transaction value to assess profitability and risk exposure.

Risk & Compliance

Merchants categorized under MCC 3691 (Dillon Inns) face significant scrutiny due to the potential for financial risk and reputational damage. Payment Service Providers (PSPs) and acquirers implement rigorous compliance measures, expecting merchants to effectively manage issues related to fraud, chargebacks, and AML/KYC requirements.

Chargebacks & fraud

High instances of friendly fraud, where customers falsely claim they did not authorize a transaction, as well as bonus abuse where promotional offers are exploited unethically.

• Fraud patterns may include the use of stolen payment information and attempts to bypass payment controls.
• Common mitigation tools include velocity checks to prevent rapid repeated bets, device fingerprinting to assess the uniqueness of users, and behavioral analytics to identify suspicious activity.

AML/KYC expectations

Merchants must perform strong customer identity verification (IDV), including rigorous checks against sanctions and Politically Exposed Persons (PEP) lists.

• Source-of-funds verifications should be conducted, especially when transaction volumes exceed set thresholds or appear atypical.
• Triggers for manual review often involve large or frequent deposits and transactions that appear to be coordinated or utilize VPN/proxy services.

Operational red flags

Lack of transparency around ownership structures, especially in cases of white-label arrangements, raises alarms for PSPs/acquirers.

• Sources of traffic that originate from high-risk jurisdictions or through unverified affiliate partners may signal potential compliance issues.
• Absence of responsible gaming measures, like self-exclusion programs or clear betting limits, could indicate operational weaknesses.
• Merchants should also establish and communicate clear refund or return policies to avoid disputes and enhance customer trust.

Onboarding Checklist

Merchants under the MCC code 3691 should prepare a comprehensive onboarding package before approaching PSPs or acquirers. A well-organized submission enhances approval chances and minimizes 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 essential for merchants in this MCC, particularly because they ensure compliance with local regulations and build trust with customers. Recognition of licenses can vary significantly depending on the merchant's jurisdiction and the target markets.

Operator licenses

Alcohol Beverage Control (ABC) licenses — required in many jurisdictions in the US for establishments serving alcoholic beverages.

• Liquor Control Board (LCB) licenses — recognized in certain states, essential for compliance with state-specific alcohol regulations.
• Local business licenses — necessary for operation in specific cities or municipalities, often subject to local regulations.
• Health permits — may be required depending on the services offered, ensuring compliance with health and safety standards.
• Some areas require additional licenses for live entertainment or food service.

Geo-restrictions

Different states and countries have varying laws regarding alcohol service, impacting where merchants can operate.

• Certain regions may have complete bans on alcohol sales, leading to transaction rejections or restrictions.
• Local customs and regulations may impose additional limitations on operating hours or service conditions.

Certifications & audits

Compliance with local health and safety standards—frequent inspections can be expected.

• Alcohol server training certifications to ensure responsible service of alcohol.
• Local health department audits to ensure adherence to health regulations.
• Fire safety inspections may also be required depending on building codes and occupancy limits.

Official Definitions & Network Comparisons

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

Explanation:

While definitions across networks are broadly consistent, terminology like "transient lodging" versus "accommodation services" emphasizes different aspects of operations that can affect approval processes. Additionally, networks may have varying requirements regarding geolocation and licensing, especially for establishments that may be classified as higher risk. Common denial reasons include failure to provide sufficient documentation of operation, licensing issues, and inadequate service offerings that meet network standards.

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 provides lodging services, ensure you classify correctly under MCC 3691. Misuse of alternative codes can lead to compliance issues and potential penalties. Always choose the MCC that best represents your core business activity.

Best Practices for Merchants

Merchants under the MCC 3691, which pertains to "Dillon Inns," must focus on operational excellence to maintain compliance and foster positive relationships with payment service providers. The following best practices can help mitigate risks associated with payments and enhance overall business sustainability.

Classification & transparency

always use the correct MCC; accuracy in your classification is essential for compliance and relationship maintenance

• visibly display relevant licenses, geographic service areas, and guest responsibility policies on your website
• ensure all business activity is clearly represented in billing descriptors to avoid confusion

Fraud & chargeback reduction

implement 3DS or step-up authentication for online transactions, especially in cases of high-ticket or atypical bookings

• provide clear billing descriptors and confirm reservations through instant notifications (SMS/email) to enhance customer trust
• keep detailed logs of transaction and guest activity to assist in building a robust case for dispute representments

Payment acceptance optimization

support a variety of payment methods (credit cards, digital wallets, local payment solutions) to cater to diverse customer preferences

• actively route transactions based on geographic location or payment provider performance to maximize approval rates
• consider establishing separate merchant IDs (MIDs) for different service offerings or geographic regions to better manage risk

Operational discipline

regularly monitor key performance indicators (KPIs) such as authorization rates, chargeback ratios, and transaction success rates

• conduct periodic compliance audits and review internal policies to ensure adherence to industry standards
• designate a team member or process specifically to handle disputes with clearly defined response timelines

Payouts & liquidity

maintain adequate liquidity buffers to accommodate rolling reserves and possible delays in settlements

• implement automated anti-money laundering (AML) checks for withdrawal amounts exceeding specified thresholds
• track withdrawal patterns and payout speeds to identify unusual behaviors that may indicate risk

Business Scope & Examples

This MCC encompasses businesses primarily involved in the hospitality sector, specifically those providing lodging and accommodation services. Merchants classified under this category typically offer overnight stays and related services, including amenities for travelers and tourists.

Models

hotels and motels

• bed and breakfast establishments
• vacation rentals (e.g., cabins, apartments)
• hostels and budget accommodations
• resorts and spa hotels

Borderline cases

Extended-stay facilities — properties offering long-term lodging but may provide hotel-like services; can sometimes blur classifications if amenities and services are not clear.

• Short-term rentals — platforms that facilitate private individuals renting out their homes or rooms; generally fall under this MCC unless they operate purely as traditional real estate.

Signals for correct classification

business provides overnight accommodations for guests

• services include check-in/check-out and room amenities
• revenue primarily generated from nightly stays rather than food or entertainment