There’s a reason why we say ‘Take Charge of Chargebacks’ and it isn’t just because it’s catchy. We’ve recognized a clear and present need for hotels to prevent the hemorrhaging of profits, which often goes unnoticed because the true effect of chargebacks is dispersed across several different departments.
Especially after COVID-19 and the drive to make payments contactless, most transactions are now occurring online which can leave hotels vulnerable to all manner of disputes including friendly fraud. For the latter term, (and unlike genuine fraud where the card is stolen and used for unauthorized payments) these represent cases where the cardholder purchases a guestroom or other service from a hotel then disputes the charge and demands a refund.
When you tally it all up, a chargeback can actually cost a hotel up to three times the dollar amount that’s refunded to the customer. And without effective technologies in place, the credit card processors and issuing card are inclined to side with the cardholder as a form of customer protection, meaning that hotels are more likely to loss a dispute.
Besides the value refunded, the costs can include:
- Lost inventory (for example, room nights that could’ve been sold to other guests)
- Administration time from your team to prepare documentation to defend your claim
- Chargeback management fees from the credit card processor
- Increased processing fees as your hotel is deemed higher risk
- Establishment of more flexible cancellation policies to avoid chargeback disputes, which can result in more last-minute cancellations and further inventory loses
This is why they are ‘silent’; because you may only see the dollar value lost but really there a lot more happening behind the scenes. Luckily, TransForm has specific features in place to help you win chargeback disputes and reinforce your hotel’s cybersecurity in the process. Many of these features are discussed in other blog posts, but we are more than happy to set up a demo so that we can show you how each could work for your property.