No business can wholly eliminate chargebacks. However, prevention is often better, simpler and cheaper than cure. Have a look at our 10 top prevention tips below, especially for the hotel and cruise industries.

1. Use a recognisable business name

One of the most common reasons for a chargeback is when the guest does not recognise a purchase on their statement. Supply an easily recognisable business name to your acquirer or service provider. They can then ensure that this appears on the guest’s statement. This is key if your registered business name is different to your trading, franchise or hotel name.

2. Communicate terms and conditions clearly

Communicate your charging, cancellation and refund policies clearly to the guest at the time the booking is made. Depending on how you trade, you can include these terms and conditions as part of the online check-out page near the ‘submit’, ‘pay’ or ‘click to accept’ button. Or as a separate ‘click to accept’ box in the checkout sequence. Call centre operatives can provide details verbally and then confirm them via e-mail, text or post. It is a legal requirement in many countries as well as good business practice to make terms and conditions of sale clear to the guest. However, review and monitor your proper disclosure practices regularly. There may be scope to improve and deliver even better customer service, as well as prevent chargebacks.

3. Manage guest expectations before charging cards

If you take deposits or charge guests a non-refundable portion of their stay before they arrive, ensure that you let them know. If a guest sees a charge on their statement before their stay or cruise, this may lead to a ‘non-receipt of merchandise/ service’ chargeback that could have been prevented.

4. Know where you stand with guaranteed reservations and ‘no shows’

If you guarantee a reservation against a card, you have certain rights and responsibilities. You must ensure that the accommodation is available as reserved and agreed with the guest. If you overbook, you must find comparable accommodation of at least equal quality for at least one night, transportation to that establishment, and forwarding of all the guest’s calls and messages. If the guest fails to claim or cancel their reservation, you have the right to charge a ‘no show’ for one night’s accommodation to the guest’s card. However, remember that your organisation is responsible for all of its third party reservations. A reservation may be cancelled directly through you or your third party agent. To avoid potential chargebacks, ensure that all cancellations made through third party agents are provided to you by the agent.

5. Communicate policies on delayed transactions clearly

You may bill guests for additional charges discovered after they have checked out or disembarked, such as room service, mini bar, spa or damage to the room. Explain your policy regarding amended or additional charges at check-in or embarkation. After the guest checks out, deposit a separate sales draft for delayed transactions. Obtain electronic authorisation, if applicable. Attach the terminal receipt to the guest record. Mail the transaction sales receipt and a detailed explanation of the additional charge to the cardholder. Failure to do so may result in cardholder queries, complaints and possible chargebacks.

6. Deposit card transactions promptly

Submit card transaction information as soon as possible after the guest checks out or disembarks the cruise. Preferably the same day for debits from a guest account and within five days for credits to their account. Holding on to transactions for longer could lead to chargebacks for ‘late presentment’ or ‘credit not processed’.

7. Check that the card is in date

Another of the most common reasons for chargebacks is processing an expired card. Your terminal should be automatically programmed to flag expired cards, so you can ask the guest for an alternative form of payment. If you accept website payments, it should be easy to flag to the guest that they have entered the details of an expired card.

8. Train your staff on correct card handling procedures

Ensure that everyone who accepts payment from guests knows how to do this and how the terminal works. Not only will this help your front-of-house staff to feel more confident and professional, but it will also help ensure that you accept cards securely and correctly. It will help prevent avoidable errors, such as failing to authorise payment, ask for a signature, or processing transactions more than once.

9. Provide customer service contact details

Again, this is standard business practice which you are probably already doing. Yet providing your contact details (telephone numbers, e-mail address etc.) not only ensures good customer service but may also prevent a routine enquiry from escalating into a chargeback. A frequently asked questions section on your website also helps your guests help themselves with such enquiries.

10. Action guest complaints promptly

Have adequate complaints handling procedures in place for guest billing queries and claims. If guest complaints are addressed fully and promptly at an early stage, this may help avoid unnecessary chargebacks later.

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