Is your hotel struggling with the occasional chargeback that could be avoided? You’ve come to the right place. At CB-ALERT, we streamline the chargeback defense process and implement real-time strategies such as chargeback alerts to prevent your business from disputes.
- Implementing fraud prevention tools can help reduce the risk of chargebacks due to credit card fraud.
- Clearly stated terms and conditions can minimize disputes over additional charges and terms of service.
- Clearly communicating cancellation policies can reduce chargebacks related to no-shows and late cancellations.
- Processing errors and authorization issues can lead to chargebacks, so it’s important to analyze historical data and ensure proper payment processing procedures are in place.
What Are Hotel Chargebacks?
A hotel chargeback is a transaction reversal you might face when a guest disputes a charge on their credit card through their bank rather than seeking a refund directly from you, the hotel. This typically occurs when the guest believes they’ve been wrongly charged, whether due to a billing error, dissatisfaction with services, or fraudulent activity.
It’s important to understand that a chargeback isn’t a traditional refund. Instead, it’s a forceful return of funds initiated by the cardholder’s bank.
Securing assistance for your chargeback is straightforward—follow these steps to initiate the application. To facilitate a swift approval for chargeback management, we’ll need the following information:
- Company name
- Registered business address
- Merchant account descriptor
- Merchant account number issued by your payment processor
Who Is Involved In The Chargeback Cycle?
Chargebacks involve numerous people throughout the process.
Here are the key players you need to know:
- The Cardholder: Your hotel guest initiates the chargeback by disputing a charge with their bank.
- The Issuing Bank: This institution issued the card to the guest. They’re responsible for initiating the chargeback process.
- The Merchant Bank: This is your hotel’s bank. They receive chargeback notifications and communicate these to you.
- The Card Networks: These are entities like Visa or Mastercard. They serve as intermediaries, facilitating communication between the issuing and merchant banks.
Most Common Cause Of Hotel Chargebacks
Credit card fraud can occur when a card is used without the owner’s consent.
Disputes often happen when guests question additional charges such as room service or mini-bar fees.
No-shows or last-minute cancellations can lead to chargebacks if guests aren’t aware of your cancellation policy.
Processing errors, such as duplicate charges or incorrect amounts, can result in chargebacks.
Why They Are Costly
Chargebacks aren’t just a simple refund to the customer; they come with additional costs that make them particularly costly for your business.
- Chargeback fees: Every time a chargeback occurs, your payment processor will impose a fee ranging from $20 to $100 per incident.
- Lost revenue: The revenue from the disputed transaction is immediately withdrawn from your account.
- Operational costs: The process of disputing a chargeback takes time and resources, adding to your operational costs.
- Reputational damage: Too many chargebacks can harm your relationship with card companies, potentially leading to higher processing fees or losing the ability to accept card payments altogether. They also hurt your relationship with potential new customers.
How To Prevent Chargebacks
Effectively managing chargebacks and fraud is key to your hospitality company. Below is a quick review of our strategy to reduce chargebacks.
- Deploy Robust Fraud Prevention Tools: Strengthen your defenses by incorporating advanced tools such as 3DS2 authentication, RDR, and Ethoca/Verifi alerts.
- Optimize Merchant Descriptor: Enhance recognition by ensuring your merchant descriptor accurately matches your online storefront name, reducing confusion and the likelihood of chargebacks.
- Partner With CB-ALERT: Collaborate with CB-ALERT to proactively eliminate fraud and prevent chargebacks.
- Ensure Transparent Transaction Details: Communicate comprehensive purchase details, pricing, and fees to minimize misunderstandings and reduce the occurrence of chargebacks.
- Prioritize Refunds Over Chargebacks: Offer cost-effective refunds to maintain customer loyalty and prevent chargebacks.
- Round-the-Clock Customer Service: Provide exceptional customer service 24/7 to prevent disputes from escalating to the point of chargebacks.
- Use Clear Billing Descriptors: Ensure credit card statements have clear billing descriptors to reduce confusion and minimize chargebacks.
- Maintain Accurate Records: Keep meticulous transaction records for valuable documentation in chargeback disputes.
- Employ Chargeback Monitoring Systems: Utilize alert systems for prompt and efficient management of disputes.
- Scrutinize Irregular Orders: Investigate unusual transactions, particularly those from unfamiliar locations or involving significant amounts, to ensure accuracy and security.
Choose CB-ALERT For Your Chargeback Management
As a hotel business, you’re no stranger to the detrimental impact of chargebacks and friendly fraud on your financial stability.
Collaborating with CB-ALERT alleviates the burden, liberating your time that would otherwise be spent combating chargebacks. Below is a quick list of what you can expect with CB-ALERT.
- Chargeback prevention alerts
- 24/7 customer service
- Transparent pricing
- RDR (Rapid Dispute Resolution)
- Visa compelling evidence 3.0
- Gateway/CRM agnostic approach
Now that you have insight into industry-specific chargeback challenges, please complete the application below to discover how CB-ALERT can enhance your hotel business.