How to reduce chargebacks in the hospitality & accommodation industry?

Most hotels and B&B’s don’t get much of an issue with chargebacks, but it only takes 1 to really upset you and get you angry that you have been a victim of fraud. We have a few hotels and serviced apartments that have been caught with a chargeback and here are a few tips to try to avoid them.

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Who is the most susceptible to a chargeback?

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Anyone who charges a credit card without the owner present is at risk, that Non-Refundable rate plan that you give customers a discount for could cost you more than you thought if you don’t have the correct policy to screen for fraud.

What is the safest way to take card payments?

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The safest is Chip & Pin where you see the guest physically with the card, they type in the Pin number and this is immune to chargebacks.

How can we reduce the chances of fraud on advance payments?

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It’s often very useful for a business to take payments before the guest arrives, this helps speed up check-in and customer satisfaction. Also avoid no-shows which increases revenues for the hotel.

A Few Tips:

1. Ask guest to present the card that paid for the room, you need to check that the last 4 digits match and the name matches the guest or their ID if you want to check further. Cons: This doesn’t help many people who don’t check people in physically. Also if you catch fraud here then you are likely to lose the booking and have to refund the card.
2. Some hotels are still asking guests to email a picture of their ID and credit card. Please note this is not safe and probably against many regulations
3. Use 3D Secure checkout on your booking engine and payment pages, this will protect you from fraud as they will not be able to pass the security check.
4. Instead of taking payment, send the guest a payment request to securely pay for the booking with 3D Secure enabled.

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What about bookings I get over the phone or via OTA?

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It’s really simple, all you need is to send them a payment request via email. When they receive the email they can follow the link to a secure page where they can pay via 3D Secure. It is slightly harder for the guest but it protects you from fraud and chargebacks.

Most software should handle payment requests, you can also use your accounting software if you have to.

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Conclusion

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A bit of common sense and policies should protect you from 99% of cases. Remember if your based in a major city the chances of fraud is 10x greater than if your outside in a small town. I know many hotels in non tourist locations to not had a problem in over 20 years.