Beyond the scope of any digital transaction or credit card verification technologies, a credo that applies to innumerous businesses is the 80/20 rule. For hospitality, this often means that 80% of a hotel’s problems will stem from 20% of its customers.
Now, bringing the focus back to payment systems, we see this play out these days in the form of friendly guest – a hidden cost that has grown exponentially in the past few years. A simple definition of this (to distinguish it from criminal or genuine fraud) would be cases where an actual cardholder has used a hotel’s goods or service but then denies these activities ever took place and demands a refund.
For example, suppose a guest takes advantage of a recent promotion you launched, staying with you a weekend getaway – Friday and Saturday night – and dining at your in-house restaurant both evenings. All is good until three weeks later when your accounting team receives notice that the room reservation and both dinner bills are being disputed.
While there is a chance you might win this chargeback, there’s also a high probability you won’t because credit card processors are systemically predisposed to protect the cardholder by favoring their perspective in a dispute with a merchant. It’s a bit of a loophole for card-not-present transactions.
So, beyond the total refundable amount (room nights and both meals), you have significant opportunity costs on two fronts. You could’ve sold that room on a busy weekend to another (hopefully honest) guest while your accounting team could’ve spent their time focusing on other tasks in lieu of preparing documentation to support the hotel’s case in the dispute (what is often called ‘representment’).
TransForm is specifically designed to maximize a hotel’s chances of winning chargeback disputes by tokenizing all credit card data before anyone from the hotel team can gain full visibility on that sensitive information. It’s a powerful step that saves a ton of headaches later on.
By doing this – that is, making the cardholder key in their own details via a secure ecommerce portal – properties can fully abide by PCI DSS compliance standards because it can be proven that no one from the hotel side ever saw the full card to thereby charge it without the guest’s permission.
Not letting guests take advantage of the card-not-present loophole by ensuring that no one on your team had even a remote chance of seeing the card therefore minimizes friendly fraud and, ultimately, deters these bad actors from selecting your property in the first place.
Other features in TransForm are worth highlighting for their capacity to discourage these toxic guests (the customers most likely to commit friendly fraud) from ever staying at your hotel. Demo a book to learn more about how the following can help:
- Global lead time restrictions
- Built-in CVV, AVS and 3DS settings
- Closure after completion.
- PMS integrations
