Chargebacks – the process where a guest disputes a credit card charge and requests a reversal – can be one of the most frustrating aspects of running a hospitality business. Even when you’ve done everything right at the operational level, chargebacks can catch you off-guard, costing you time, money, and sometimes your reputation.
Yet many accommodation providers remain unprepared for chargebacks. Industry experts consistently cite poor payment handling and inadequate documentation as key reasons why businesses lose chargeback disputes.
The good news? By taking proactive steps, you can significantly reduce your exposure to chargebacks and improve your chances of resolving disputes in your favour.
The first line of defence is processing payments securely. Using payment solutions that support technologies like 3D Secure helps prove guest authorisation, making it much harder for disputes to succeed. Implement processes to preauthorise cards at the time of booking and collect payments while the guest is present online. This creates a digital trail that shows the guest agreed to the transaction and understood your terms – critical proof if a chargeback is filed later.
Detailed, clear communication also matters. Confirming bookings with automated, branded emails that include your cancellation and payment policies can make a decisive difference in disputes. These confirmations, along with accurate invoices and receipts, become essential evidence if you need to contest a chargeback.
A common but avoidable mistake is failing to properly record guest information. By automating check-in and collecting IDs or registration details, you create additional proof of the guest’s intent to stay. Securely storing this documentation and linking it to each booking helps you build a comprehensive case file if needed.
Regularly reconciling your payments – especially from OTAs – is another important step. Discrepancies in payments or commissions can lead to disputes if guests feel overcharged. Automating reconciliation ensures accuracy and helps you spot inconsistences before they escalate into formal chargebacks, reducing misunderstandings.
Lastly, ensure your payment processes are fully PCI DSS compliant. This isn’t just good practice – it’s essential. Mishandling card data or skipping security updates can increase both fraud risks and your vulnerability to chargebacks. Provide staff with ongoing training and maintain strict controls over who can access payment data. This helps close any gaps that fraudsters might exploit.
Chargebacks may be an inevitable part of hospitality, but with secure payment methods, clear records, and automated processes, they don’t have to be a costly surprise. Instead, you can approach them with confidence, knowing you’ve done everything possible to protect your revenue.
For comprehensive strategies on secure payments and avoiding chargebacks, download our White Paper on Protecting Your Cash.