The 2020 holiday season was a weird one. Much of the world was still under some form of lockdown or travel restriction, which prevented normal spending habits from occurring. Instead, people went online for their gift shopping, and in turn this has led to a surge in returns and chargebacks. Hotels weren’t excluded from this post-holiday headache either.
As the payment industry leader in helping businesses win chargeback disputes, we know all too well how annoying these can be. Hotels and resorts can incur tens of thousands of dollars per month in lost revenue due to chargebacks, so it’s important that every hotelier understand exactly what is meant by the term and what they can do to prevent them from happening.
Chargebacks are a form of credit card transaction reversal that the cardholder initiates through their bank in coordination with the credit card processor (Visa, Mastercard, American Express, etc.).
Typically, such cases are opened by the customer because they feel they were incorrectly charged, because something purchased was never received, because a merchant’s goods were of inferior quality or because of an outright instance of fraud.
There are a variety of reasons, and banks facilitate chargebacks as they help to protect the end consumer from harm and keep merchants honest.
Because the ultimate goal is to protect the cardholder, though, this means that each chargeback dispute is skewed from the beginning to favor the customer (for our purposes, the guest) over the merchant (that is, the hotel).
This skew is even more pronounced for card-not-present transactions – instances where the cardholder is not physically present at the merchant’s location to verify the payment amount by inputting their card’s security PIN or adding their signature.
With the whole world going contactless in the wake of COVID-19, card-not-present transactions are becoming the most popular form of payment. Therefore, you need systems in place that can offer as much digital authentication as possible so that, as merchants, your hotel has proof of express permission by the cardholder to charge their account. We can do this for you, so book a demo and we’ll show you how.