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12/01/2021

Stop Chargebacks Before They Happen This Holiday Season or Find the Right Partner to Resolve Them

Chargebacks tend to come in waves, with the biggest waves coming around the Thanksgiving and Christmas holidays, but this year’s holidays come on the heels of more than a year’s worth of higher-than-usual chargeback rates because of restrictions brought about by the pandemic.
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The holidays are coming, and for the hospitality industry that means a surge of business that will come as a welcome change to the empty rooms, empty event venues and empty airline seats that were the unfortunate result of the COVID-19 pandemic.

People are traveling again, and getting back to all of the things they do during the holidays. This includes booking tickets and rooms and reuniting with loved ones across the country. And as hoteliers know only too well, it also includes disputing credit card charges.

Chargebacks tend to come in waves, with the biggest waves coming around the Thanksgiving and Christmas holidays. And that is in normal times.

This year has been anything but normal times, and this year’s holidays come on the heels of more than a year’s worth of higher-than-usual chargeback rates because of restrictions brought about by the pandemic. They forced far more than the standard number of room and ticket cancellations—and often at the very last minute.

And in addition to all of the legitimate chargebacks by travelers whose plans were dashed by social distancing guidelines, there has also been an increase in fraudulent chargebacks, heaping more problems on an already beleaguered industry.

The holidays are coming, but when they pass the industry can’t safely assume there will be a return to the standard, fairly manageable rate of chargebacks. That’s because when the holidays are over, the pandemic likely won’t be. Many travel plans made in 2022 are likely to be tentative plans, subject to change or cancellation as the COVID situation evolves.

With the tsunami of chargebacks that the industry has been dealing with—and no official end in sight—hoteliers must do whatever they can to stop them before they happen. Failing this, they should find the right payments technology partner who can resolve these issues the right way.

Getting in Front of the Problem

The key to mitigating the chargeback problem is getting to its root. That means understanding the consumer, and why he or she might have to quickly change travel arrangements.

Communication is the key to understanding customers, so hoteliers and other hospitality industry professionals need to be in constant contact with cardholders, right up until the time of the reservation.

This means sending a confirmation, then later re-confirming the confirmation. It means spelling out the terms of allowable cancellation – and then doing the same thing again. Businesses need to think in terms of creating a record of communication that clearly outlines the rules and timelines for cancellation, and a record that shows frequent contact.

And businesses need to keep in mind that people get a lot of emails. Important messages can end up in spam filters. Messages can be deleted unopened. For this reason, text messages and other forms of communication should be considered as another avenue.

Hospitality businesses can do more to get out in front of the chargeback problem, and in many cases prevent them from happening in the first place.

But no matter the lengths businesses go—and however frequently they communicate with cardholders—chargebacks will still happen. Resolving these issues in a way that benefits both the cardholder and the business is just one reason to partner with the right payments technology partner.

How to Partner for Success

Resolving chargebacks is just one of the several reasons many hospitality businesses partner with payment and commerce technology platforms.

The right technology partner for the hospitality industry will have a team of professionals specifically devoted to the issue of chargebacks. Credit card issuers back up the cardholder when it comes to disputed charges – so the right partner will have a team that backs up the merchant. Reservations are usually made through third parties, all of whom have different methods of completing transactions. This is why the issue requires a team, and the right partner will have one in place.

This is just one example of why the industry needs partners that have built payment technologies specifically to serve hospitality businesses, as opposed to a partner offering a one-size-fits-all model to a variety of industries.

Hospitality is a dynamic industry, meaning one size of anything will never fit all. It’s not just the payment schemes of different credit card companies that change constantly – the preferences of the customer also change.

How people pay and when they pay is something that changed quickly during the height of the pandemic, and it’s something that could easily change again in the year ahead. In 2020, travelers suddenly needed contactless payment. They had a reason to stay away from the front desk.

That’s a change that came about quickly, and it’s safe to assume there will be more changes in the future. Consumers may demand new flexibility, and it will be up to hospitality businesses to accommodate that without delay.

Payments technology companies with a specific focus on hospitality were able to quickly stand up new payment options when COVID changed the way business was done. And just as importantly, those same payments partners will be able to handle the next change quickly, as they have the right teams, partnerships with top brands and the right mindset to serve the dynamic industry, which is unlike any other.

‘Tis the season for disputed credit card charges, but even after New Year’s, they may continue unabated. Hospitality businesses need to do everything they can to stop them before they happen.

The right technology partner can smooth out the whole process when it comes to the chargebacks that are going to happen despite businesses’ best efforts. But the right partner will go far beyond that, and help businesses adapt to the constant changes of one of the world’s most dynamic industries.