5 Ways to Reduce Travel Industry Chargebacks After the Holidays
Dec 29, 2021 2 minute Read
As we approach 2022, many people are prepping to give and receive travel-related gifts. From plane tickets and cruises to tours and events, this upcoming year is ready to embrace travel once again.
That’s great news for anyone working in the travel industry. But you know what’s not such great news? Chargeback potential is high. Plans change, the pandemic continues to amass another wave of infections, or people simply don’t want to do the thing they have tickets for. That’s the problem with gift-giving. It’s all made with good intentions, but it doesn’t always work out, whether at the fault of the giver or the world.
And now with the rise of online payments (i.e., card-not-present transactions), credit card chargeback fraud is high. Between stolen cards, card numbers, and cardholder identities to friendly fraud, travel providers need to prep themselves for a rise in chargeback claims.
So, what can you do to prevent holiday chargebacks for your travel business? Read on for our list of suggestions.
1. Focus on Customer Satisfaction
The holiday season is one of the busiest times for travel agencies, but it is also their busiest time for chargebacks. To help reduce your risk of travel industry chargebacks after the holidays, consider the following tips:
Speak to the Customer
If you can resolve an issue about a previous purchase with a customer directly, do so. You might be able to get them to agree to cancel the dispute and continue doing business with you as long as you resolve their concerns on that particular card transaction.
Avoid Overselling
This is something many agencies have to deal with every year. Overselling means booking customers into hotels that are overbooked or on flights where there are not enough seats available or sold out completely. At a time like this, people are more concerned than every about their safety and personal space. Avoiding selling overbooked tickets means avoiding holiday travel chargebacks.
Communicate with your Customers
Travel companies should always be proactively reaching out to customers before and after they purchase tickets or book reservations through your agency to ensure they are satisfied with their purchases and will continue using your company again in the future. If you communicate regularly, there is less chance of a customer becoming dissatisfied and filing a chargeback against you later on in the process when they are unhappy with something else that did not go as planned.
2. Keep Customers Informed About COVID-Related Travel Industry News
COVID isn’t going away any time soon. Still, it isn’t stopping people from wanting to travel. And since we’ve been dealing with the pandemic for nearly 2 years now, many countries, regions, and cities have figured out ways to allow travelers to enter while reducing the risk of a spread.
Having said that, spikes in coronavirus infections can occur at any moment and countries have proven already that they’re willing to close borders, albeit temporarily. When travel restrictions happen, you better believe that customers are going to be outraged and attempt to cancel all their plans.
Keeping them informed daily or weekly on pandemic news related to their travel–information from their departing or destination country/countries–will help relieve the stress on them and your business. Many airlines and online booking portals offer real-time coronavirus maps with country-specific entrance criteria. This will surely help customers understand which areas are more accessible, provide them with all the paperwork they need to enter without trouble, and reduce the possibility of a booking cancelation or chargeback.
3. Offer Alternative Solutions
As a follow-up to keeping customers notified about pandemic news, you should also offer them easy alternatives. With a single click, they can change their plans and be well on their way to a brand-new destination with no additional bookings necessary on their part.
This applies to any canceled travel plan, not just COVID-related cancelations. Whether something happens with the airline or hotel or event–whatever it is, you need to have a solution ready. These alternatives should be complete with location, days/times, flights, and with an urgent CTA so they know this is the one and only chance to make the change.
4. Allow Customers to Pay in Installments
There’s been a big rise in book-now-pay-later payment services, or the “Pay in 4” model. Some customers might prefer to pay in installments instead of full sum at the time of booking. Some customers might feel more comfortable paying a small deposit or even just a reservation fee at this point. Offering these options can help them commit to their travel plans and minimize cancellations when it’s time to pay the balance.
A lot of post-holiday chargebacks happen because customers see the damage they’ve made to their bank account over the last month or so. By allowing them to pay in installments, they’ll be less likely to cancel their plans either with you or their credit card.
Installments are also settled in a way that allows you to process smaller transactions instead of one high-ticket transaction, which is always better when it comes to risk and chargebacks. And we all know how expensive traveling can be. Plus, you can tie these installments down to your terms of service, so maybe the first installment acts more as a non-refundable reservation fee that won’t be returned even if they do cancel.
5. Update Your Cancelation Terms and Refund Policy
The travel industry is one of the most competitive areas of ecommerce. Customers are more likely to try a new airline, hotel, or cruise line if they can get a better price online than they can through a travel agent. And with so many new companies pushing into the market every day, it’s important that your ecommerce travel site is as competitive as possible in terms of pricing and service.
The biggest challenge you face in this competitive environment? The risk of customer chargebacks. Customers may decide they don’t want to use your services after all, but instead of contacting you to request a refund, they contact their credit card company and dispute the charge. This is called a “chargeback,” and it represents a major loss for your business.
To avoid chargebacks on your ecommerce travel site, it’s important that you have clear cancellation policies posted on your site and that these policies are easy to find. It’s also crucial that you communicate these policies to customers via email confirmation following an online booking and again via email when the trip has ended, so customers know exactly what their options are for receiving refunds.
You also need to make it clear when cardholders are buying non-refundable tickets, whether they can get a partial refund if any at all, and what other options they have that ultimately leave you with one less chargeback or refund. Things like travel credits and vouchers work in your favor or alternative booking opportunities.
You can also require some level of travel insurance at the time of booking to make customers aware that things might change and they should be prepared for it.
Bonus Tips to Avoid Holiday Travel Chargebacks
The travel industry is a highly competitive one that generates a lot of chargebacks. The good news is you can reduce travel industry chargebacks by using KYC, AVS, 3D Secure 2 and other checkout security measures.
Traveling is now more popular than ever before. People want to explore the world, go on vacation, see new places, and meet new people. However, they also want to do it on a budget and this often means that travel agencies and other travel merchants need to offer special deals and incentives to attract customers. This creates an opportunity for fraudsters who will take advantage of the situation and attempt to defraud businesses by claiming money for stays that never happened or by writing fake reviews online about their experience.
Checkout Security
These types of behavior are likely to result in chargebacks being made against your travel business and can cause a lot of damage when they occur. To reduce travel industry chargebacks you should ensure that your payment gateway supports AVS (Address Verification Service), as well as CVV2/CVC2 (Card Verification Value) and 3D secure 2 so that you can make sure any payments you receive are legitimate before processing them through your payment system.
Record Keeping
Another measure that works towards combatting a chargeback is providing excellent customer service and a smooth travel experience in order to reduce instances of fraud or dissatisfaction. However, it is also important that businesses keep good records, such as receipts, correspondence and communication with customers, in order to successfully dispute chargebacks.
To keep your travel agency flying sky-high past the holidays, you need to avoid chargebacks. The best way to do that is using a high-risk merchant with chargeback protection.
The travel industry is high-risk. That means no matter what you do, payment processors and acquirers are going to see you as a risk, and either won’t support your business or will severely limit their services for you. That’s not good when travel bookings are usually high-ticket items.
Use a high-risk merchant account designed to help businesses like yours get the credit card and payment solutions needed to keep customers happy and business moving forward.
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