3717 City lodge hotels

Introduction

• What it is: This MCC represents businesses primarily engaged in providing lodging services.
• Risk level: Medium — Due to seasonal fluctuations and potential chargebacks.
• Acceptance difficulty: Medium — While generally accepted, may require thorough vetting due to the nature of services.
• Typical business models: City hotels; boutique hotels; motels; lodging houses; vacation rentals.
• For merchants: Expect moderate MDR; potential for service-related holds; onboarding might include detailed financial disclosures.
• What PSPs expect: Business registration documentation; proof of insurance; comprehensive details about services and pricing.

Payment Insights & Benchmarks

Merchants in this MCC should prepare for a unique payment landscape characterized by varied acceptance rates and potential challenges related to fraud and chargebacks. Understanding these dynamics is crucial for effective financial planning and operational efficiency.

Payment methods

Cards: widely accepted but may experience fluctuating approval rates depending on customer profile and provider partnerships.

• E-wallets: convenient for guests preferring digital solutions, but adoption can vary by region.
• Direct bank transfers: popular for higher-value bookings, though not as instant as card payments.
• Mobile payments: growing in popularity; needs adequate tech support for smooth acceptance.

Authentication & security

3DS (Three-Domain Secure) implementation is common, aiming to mitigate fraud risk on card transactions.

• Strong Customer Authentication (SCA) may be required, especially for online bookings, impacting user experience.
• Continuous fraud monitoring is essential to detect problematic patterns and minimize chargebacks.

Benchmarks (indicative, not guaranteed)

MDR: generally higher than standard e-commerce rates due to the risk profile of the hospitality sector.

• Rolling reserves: often seen in the range of 5-15%, reflecting the higher risk of cancellations and disputes.
• Settlement times: typically longer, potentially exceeding 5-7 days, which may affect cash flow.
• Chargeback ratios: expected to be higher than average, particularly for no-show scenarios.
• Approval rates: may fluctuate significantly based on factors such as booking source and traveler demographics.

Key metrics to monitor

Authorization rates segmented by payment method and traveler profiles.

• Chargeback reasons categorized by type to develop targeted mitigation strategies.
• Average booking values to understand ticket dynamics and potential fraud impact.
• Decline rates and reasons for failed transactions, providing insight into customer experience issues.

Risk & Compliance

Merchants in the hotel and lodging industry, such as those covered by MCC 3717, are subject to considerable risks due to the nature of bookings and transactions involved. This includes both financial risks from chargebacks and reputational risks resulting from fraud. PSPs and acquirers impose rigorous compliance measures to ensure that merchants mitigate these risks effectively.

Chargebacks & fraud

Commonly face issues with friendly fraud, where customers dispute legitimate charges by claiming unauthorized transactions.

• Stolen credit cards and reservation fraud, such as booking costly rooms and not showing up, are prevalent abuse patterns.
• Mitigation tools include chargeback alerts, advanced fraud detection systems, and customer verification processes at the time of booking.

AML/KYC expectations

Strong identity verification (IDV) is required to ensure that guests are accurately identified, particularly for online bookings.

• Sanctions checks are necessary to prevent transactions from individuals or entities on restricted lists.
• Manual review triggers include multiple bookings from the same IP address, payment methods frequently used in fraud, or high-risk geographies emerging in the booking data.

Operational red flags

Lack of transparency in ownership structures, causing concerns about who operates the hotel or if there's hidden ownership by third-party entities.

• Unverified sources for customer traffic, especially if bookings come from unusual or restricted regions.
• Absence of clear cancellation and refund policies, leading to potential disputes and chargebacks.
• Limited or no evidence of robust safety measures (e.g., customer data protection, secure payment processing) could alarm PSPs/acquirers.

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

• overview of services provided, including room types and amenities
• marketing plan and traffic source overview (affiliates, SEO, PPC)
• geographic targeting information

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
• reservation, cancellation, and refund policies
• 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 — required in most jurisdictions for operating any hospitality service.

• Health and safety certificates — important for ensuring compliance with local health regulations.
• Alcohol licenses — necessary if the establishment serves alcoholic beverages, depending on local laws.
• Tourism or hospitality licenses — may be needed for certain regions, focusing on tourism-related operations.
• Some jurisdictions may enforce zoning laws affecting hotel operations.

Geo-restrictions

Countries with strict tourism regulations → licensing might be required before engaging in operation.

• Some areas may have restrictions on foreign ownership of hospitality businesses.
• Regulations may vary significantly between urban and rural settings, impacting operational scope.

Certifications & audits

PCI DSS compliance for handling credit card transactions securely.

• Health and safety audits to verify adherence to local regulations.
• Fire safety inspections required by local authorities.
• Regular customer satisfaction surveys and reviews may be mandated to maintain hospitality standards.

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 networks generally refer to "travel agencies," they may emphasize different aspects such as licensing or documentation. Some networks may necessitate a more thorough vetting process based on the merchant's jurisdiction. Common denial reasons include insufficient documentation of services provided, non-compliance with regional regulations, and elevated risk based on geographic factors.

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 temporary accommodation with services typical of hotels, use MCC 3717. Avoid using alternative codes when your service does not fit the traditional lodging or hotel model, as this is a significant compliance risk that could affect your merchant account status.

Best Practices for Merchants

Merchants under the 3717 MCC, which includes establishments like City Lodge Hotels, must ensure effective management of reservations, guest experiences, and financial operations. Adopting best practices helps minimize risk while building a solid foundation for customer satisfaction and sustainable payment processing.

Classification & transparency

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

• clearly display terms of service, cancellation policies, and facility details on your website
• maintain transparency in billing descriptors to ensure guests recognize charges

Fraud & chargeback reduction

implement 3DS or step-up authentication for transactions with high-risk indicators (large amounts, new accounts)

• use clear and immediate billing descriptors along with prompt confirmation emails to customers
• log transaction details and customer interactions to create a robust record for dispute resolutions

Payment acceptance optimization

offer various payment methods (credit cards, mobile wallets, local payment options) to accommodate guest preferences

• route transactions based on geographic location and method to optimize success rates
• consider using separate MIDs for different service offerings to simplify reporting and risk management

Operational discipline

establish KPIs such as booking conversion rates, cancellation rates, and customer feedback scores

• conduct regular audits of payment processing systems and compliance with internal policies
• designate a team or individual responsible for managing chargebacks and customer disputes, ensuring timely follow-up

Payouts & liquidity

keep adequate liquidity buffers to manage rolling reserves and any delayed settlements from payment processors

• perform automated checks for anti-money laundering (AML) compliance on large withdrawal requests
• monitor cash flow and vacation booking trends to anticipate and manage payment cycles effectively

Business Scope & Examples

This MCC encompasses businesses that provide lodging and accommodations for travelers and guests. Merchants classified under this category typically offer services revolving around short-term and long-term stays, with additional amenities that enhance the hospitality experience. The classification focuses on establishments where customers pay for overnight lodging and associated services.

Models

hotel chains providing room accommodations

• motels offering budget-friendly lodging options
• bed and breakfast establishments
• resorts featuring extensive amenities and recreational activities
• serviced apartments catering to extended stays

Borderline cases

Hostels — while they provide accommodation, the communal living aspect may lead to different classifications, particularly if focused on budget or youth travel.

• Vacation rentals — platforms for booking private homes or apartments may fall under different codes, especially if they operate more like real estate transactions than hospitality services.

Signals for correct classification

property primarily offers rooms for overnight stays

• guests are charged per night for accommodation services
• additional amenities such as dining or event spaces are available on-site