Credit Cards offer a Future for Luxury Charter Yacht Payments (Part 1 of 2)

The luxury charter yacht industry is steeped in tradition, but when it comes to payments, are old ways holding the industry back? Current payment methods include wire transfers, ACH payments and paper checks. These processes can be cumbersome and slow, and also expose both guests and brokers to significant risks. Yachtly allows the industry to offer modern payment solutions, including credit card payments, which provide numerous advantages for both charter brokers and their clients.

A Yacht Charter Clients' Perspective: Rewards, Convenience and Security

In our experience at Yachtly, we've seen that charter clients/guests are asking to pay by credit card (with multiple cards per installment). Since we began processing payments, 85% of charter guests chose to pay by credit card when given the option. There are several reasons for this preference:

1. Earning Points and Rewards: Yacht charters often cost tens of thousands of dollars. For high-net-worth individuals, this represents a significant opportunity to earn points, miles, and other rewards offered by their credit card programs. These benefits can add real value to their charter experience.

2. Convenience and Speed: Credit card payments are nearly instant, allowing for quicker confirmation of bookings (which benefits guests and brokers) and easier management of split payments among multiple guests. This is particularly important in an industry where guests book last-minute. For brokers, offering credit cards can close a deal quickly while providing the best possible booking experience.

3. Security and Peace of Mind: Guests appreciate the added security that comes with using credit cards. Because wire transfers are irreversible, sending money to a company with whom they never interacted can be quite daunting (the Federal Trade Commission even instructs consumers not to wire money to anyone they have not met in person!). Cardholder protections offer reassurance in cases of fraud, or if a charter company goes out of business. Additionally, credit card transactions do not require guests to share sensitive bank information with charter brokers.

Why Brokers Don't Need to Fear Chargebacks

Despite these advantages, there remains hesitation by charter brokers to accept credit cards due to the fear of chargebacks. We’ve heard concerns that clients might dispute charges after the charter has taken place, leaving the broker to cover the costs of the chargeback until the yacht owner refunds the fees.

The Role of the Dispute Resolution Clause: A Broker's Best Defense

The good news is that there are effective ways to mitigate chargeback risks, and one of the most powerful tools available is a robust arbitration clause in the charter agreement. While it is true that card network rules prohibit merchants from requiring charter clients to sign away their chargeback rights, requiring guests to agree to arbitration before exercising those rights is allowed. There is nothing wrong with requiring a well-documented process for resolving disputes.

Well-written arbitration clauses require the client and the charter company to reach a written agreement before any refunds are authorized. This clause effectively protects the charter broker by ensuring that the client's chargeback rights cannot legally be exercised until the arbitration process is completed.

Embracing the Future of Yacht Charter Payments

At Yachtly, we feel that the luxury yacht charter industry is on the cusp of a payments revolution. By understanding the rights and protections available, and by implementing strategic measures like arbitration clauses, charter brokers can confidently offer credit card payments as a safe, convenient, and ultimately superior option for their business.

If you would like to learn more about modernizing your payments infrastructure, contact us at support@goyachtly.com.

Stay tuned for Part 2 where we will detail the chargeback process and how taking credit cards can help increase yacht charter business.