Chargebacks are one of the biggest problems currently facing the hospitality sector, especially hotels which are experiencing an increase in hotel chargebacks thanks to what many financial experts are labelling a growing ‘chargeback culture’.
The hospitality industry is also one that’s subject to chargeback requests for numerous reasons, hitting large chains and smaller independent enterprises hard in equal measure.
For managers in the hospitality industry and hotel owners looking at further growth and who want to streamline their payment processes, what can be done to fight back against fraudulent hotel chargebacks whilst also honouring customers who have genuine complaints?
A culture of chargebacks and ‘friendly fraud’ is hitting businesses of all shapes and sizes. How can companies adapt to an evolving consumer chargeback philosophy, protect their profits and keep markets happy at the same time? Read 'What is friendly fraud?'to learn more.
Chargebacks explained for the hospitality industry
First of all, it pays to understand why the hospitality industry is suspect to fraudulent chargebacks and the consequences when people try and claim back money against a hotelier.
Five of the most common causes of chargeback requests include:
- Not showing up: Some customers, for whatever reason, may not show up to the hotel despite booking months in advance, issuing a chargeback because they have decided not to use the room
- Not recognising the hotel name: When checking their statements, visitors may not recognise the name of the business if it’s different from the name of the hotel itself and issue a chargeback
- Payment issues: A lot of chargeback requests happen because the card processed is simply out of date, payments have failed to have been properly authorised, signatures haven’t been collected and more
- Payment expectations: Do you charge deposits before people visit your hotel or have any other fees that may catch people by surprise? People may issue a chargeback if they do not recognise these extra costs
- Delayed payments: There may be reason to charge visitors for items after they’ve checked out; mini-bar usage one of the most common reasons. Again, they may not recognise these outlays and issue a chargeback
Chargebacks explained: How hotels are fighting back
One of the most common underlying factors for hospitality chargebacks revolve around communication, as outlined above. Most people won’t issue a chargeback request straight away; rather, they’ll likely get in touch first to resolve any issues they may feel be present.
It’s essential to outline your hotel’s terms, conditions and policies as clearly and as effectively as possible before, during and after your customers’ visit. That includes staff communication and keeping your website’s FAQ pages as current as possible, amongst many other factors. Not holding on to the transaction and submitting it as soon as possible in clear ways can also stop a chargeback from occurring.
Having payment terminals that can instantly detect out of date cards and other financial discrepancies, and complementing that hardware with perfect customer service and clear privacy policies are just some of the changes that can be made to fight a growing chargeback culture in the hospitality industry.
Fraudulent chargebacks are one of the biggest problems facing the hospitality industry, but managers and owners can fight back and keep hold of the profits they earn. Contact Fibonatix today to find out how.
A culture of chargebacks and ‘friendly fraud’ is hitting businesses of all shapes and sizes. How can companies adapt to an evolving consumer chargeback philosophy, protect their profits and keep markets happy at the same time? Read 'What is friendly fraud and how do chargebacks work?' to learn more.