With both fraudsters and guests engaging in bad behavior, chargebacks are becoming all too common for hotels—to the point where many merchants have given up the fight in combatting them. But now more than ever, hoteliers have the tools to protect and earn back revenue, and it starts with proactive preparation. Missteps can affect a merchant’s bottom line, but easy changes can have a significant impact.
The Risks of Card Key-Entering
Manually entering card details into a PMS is considered risky behavior by card issuers, so key-entering cards leads to an increased risk of card declines and interchange downgrades (processing penalty fees). These downgrades are often hidden in statements, so merchants may not even realize how excessive their processing fees are.
Key-entered transactions are also extremely difficult to defend in the case of chargebacks, as there’s no evidence tying the cardholder to the transaction to prove they agreed to it.
These risks are particularly hindering for events with high-value transactions, as they can result in extra fees, lost sales, and significant collection efforts that impact your business.
The Benefits of Online Card Processing
By properly processing transactions via an ecommerce solution, merchants can unlock a range of benefits that help avoid chargebacks and win disputes if one arises. If you’re already processing online, consider implementing these best practices:
- Ability to Link All Payment Requests to the Contract: By linking payment requests to a contract that requires cardholders to sign off on terms and conditions, transactions are much easier to defend against chargebacks.
- Ability to Enroll in 3-D Secure: 3DS ensures a seamless payment experience by only requiring additional verification for high-risk transactions, showing your commitment to protecting customers from fraudulent transactions. If a chargeback occurs on a transaction run through a 3DS-enabled system, fraud liability automatically shifts from the merchant to the cardholder and issuing bank.
- Ability to Require CVV with Payments: Fraudsters may obtain card numbers but often lack the correct CVV. Since businesses cannot store CVV data, it’s unlikely for fraudsters to acquire it through data breaches. Set a rule to manually review or decline payments that fail the CVV verification check.
- Ability to Enable Address Verification Services (AVS): AVS helps prevent fraud and chargebacks by verifying the postal code and billing street address against the card issuer’s records. For U.S. merchants, providing the AVS postal code is also crucial to avoid Interchange (IC) downgrades on card-not-present transactions.
- Enrollment in Early Fraud Warnings (EFWs): EFWs are notices sourced from Visa TC40 reports and Mastercard SAFE (System to Avoid Fraud Effectively) reports that card issuers on these two networks generate to flag payments they suspect might be fraudulent. With a warning, you can contact customers to determine if they have initiated an inquiry or dispute and resolve it before it becomes a real dispute.
Beyond chargeback prevention, switching to ecommerce transactions can also significantly improve how hotel guests work with merchants. Submitting card or bank information via a secure online form is much more convenient for them than responding via email, phone, or fax. With greater convenience, they’ll pay faster, and teams will earn more time for other revenue-generating activities.
Merchants can also choose to surcharge credit card transactions, where permitted by law, passing processing fees to the cardholder to reduce revenue loss from card fees. ACH eCheck, available in the United States, provides an alternative for customers who prefer not to pay card fees. ACH payments are less costly than card processing and help maintain compliance with card brand surcharging requirements.
Bottom line? With fewer chargebacks, optimized processing costs, less wasted staff time, and happier guests, ecommerce transactions are a critical yet easy way to maximize hotel revenue. Plus, with the right vendor, merchants can get the expert guidance needed to make the transition seamless.
Sponsored by Sertifi.
