Gabe McGloin, Head of Merchant Sales & International Business Development at Verifi
As we all turn our attention to Christmas travel, we are hoping for twinkling lights, Christmas markets and lots of joy. However, with some of the very public travel disasters that have hit the headlines this year – Thomas Cook comes to mind – many travellers may be more cautious than normal.
The tour operator’s collapse earlier this year left more than half a million summer holidaymakers stranded overseas, with many unable to afford a flight back home – their trip of a lifetime turning into a waking nightmare. What’s worse, they had to pay for food and accommodation while waiting for rescue. One unlucky traveller was even billed an additional £2,500 by a Florida hotel after Thomas Cook failed to remit his original payment.
While failures of this scale are thankfully rare in the travel industry, such financial calamities are among the main causes of chargebacks – requests from consumers to reverse payments made from their debit or credit card. Few industries are as exposed to chargebacks as the travel sector; given the intense competition, minimising such losses needs to be an urgent priority for every business in the category. But why are chargebacks so common, and what can operators do about it?
Why travellers demand their money back
Whether in travel or perhaps any other industry, some people will take the opportunity to defraud financial institutions on their own legitimate purchases: the expensive camera that’s “stolen” and claimed on the travel insurance; the disputed restaurant bill for a meal that they swear they never ate, and so on.
In truth, fraudulent claims like these make up a small percentage of chargeback claims. More often it’s simply a case of forgetfulness behind transaction disputes, which may result in chargebacks from consumers being charged for no-shows, charges for dining and minibar consumption, and retail purchases.
It’s only when people return after their travels and the January reality sets in that they open up their credit card statement and, with great surprise, see a list of transactions that they don’t recognise.
It doesn’t matter if people are making claims in good faith and honest forgetfulness. The cost of refunding or investigating these payments is a major drain on travel businesses’ resources, which is why they need to put themselves in charge of improving refund processes.
Striking a balance
Chargebacks aren’t just a matter of losing money, important as that is. It’s also a process that is fraught with reputational risk. If travel operators are too harsh, or too untrusting in their response to customer claims, they can make their customers feel like they’re being accused of lying – and victimisation is a poor basis for a long-lasting and loyal relationship.
That doesn’t mean that travel operators should accept each and every chargeback as the cost of doing business. On the contrary: they can take a number of proactive steps to help prevent chargebacks from happening – and, just as importantly, better protect their customers from genuine errors.
Good chargeback prevention practices are more than just a guard against fraud: they are an essential element of great customer service, where disputes are resolved quickly thanks to full access to comprehensive transaction records.
Investigating chargebacks can be difficult enough for your average merchant to achieve, but for the travel industry it’s even harder (and more expensive) since these transactions usually take place abroad. Given all the attendant difficulties of language, time differences and other complications, it makes much more sense for travel businesses to focus on prevention.
The data-sharing solution
Fortunately, there have been many recent innovations in the payments industry that makes it much easier for businesses to investigate transactions effectively. These include technologies that facilitate better and more timely exchange of relevant transaction or dispute data between merchants and card issuers, helping to slash the time required for resolving disputes.
The key to reducing chargebacks is much closer collaboration between travel operators and issuers throughout the entire dispute process. Implementing steps such as providing clear billing descriptors and fostering order data-sharing between merchant and issuer can make a massive difference to the whole process, especially in reducing dispute volume overall.
For example, the latest collaboration technologies enable issuer staff members to access transaction information from a travel company’s CRM system, and then use this to check disputed transactions quickly. They can also push near real-time dispute notifications so that the business can review and resolve disputes faster to reduce time, resources, and costs associated with the chargeback process.
These technologies don’t just save time and money through reducing chargebacks and streamlining the investigatory process. They also result in lower overall dispute volumes and, perhaps even more important, improved loyalty from the customers themselves. Even if disputes aren’t ruled in their favour, customers will appreciate the speed with which the query was resolved. Meanwhile, providing comprehensive information on the transaction will mean that customers won’t have cause to continue their complaint – bringing Christmas cheer to travellers and providers alike.
