Chargebacks – Are they Back? Back Again…?

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By Krystene Bousfield

Recent murmurings suggests that Chargebacks are, once again, on the rise, with a recent Outpayce survey claiming ‘71% of [travel] companies surveyed state that they’ve seen an increase in chargebacks over recent years.

Two initial thoughts from me: 

1) Well of course we’ve seen an increase over ‘recent years’! ‘Recent years’ saw our entire industry shut down, with major travel disruption for the best part of 2 years. 

2) Chargebacks are always going to increase when people have something to complain about and, as we get back to times of travel and exploration, this of course that means things are going to go wrong and issues are going to arise. 

(I compare it to an example of a local playground, empty from September to April. On the first May Bank Holiday weekend, it is full of kids! Hundreds of them; enjoying the swings and the slides and the climbing frame and so on. That weekend, of the hundreds of kids playing in the park, 3 get injured – one broken arm, one bloody nose and a badly grazed knee. The following week, the local paper runs with the headline “PLAYGROUND INJURIES RISE BY 300%!”, but it’s all relative!) 

Chargebacks have been around for years (1974 for credit card chargebacks, and 1978 for debit cards to be precise). So, whilst they are not new, I do have to agree that for the travel industry, 2020 was the year when we saw the biggest surge in cases. Chargebacks were being pushed and promoted by ‘money experts’, talk show hosts, radio presenters, online consumer platforms – and it has to be said, the process was used and abused by thousands of individuals who successfully reclaimed monies to which they were not entitled. 

So, what did we learn? And more importantly, what can we do to minimise our risk going forward? 

1. One way to minimise the risk of chargebacks is to consider offering open banking along with other traditional methods of payment. 

Payment by card remains the most popular method by which customers pay for travel services. Everyone knows that such a system offers an added level of protection and that is why customers opt to pay by credit or debit card when booking their holiday. Other methods of payment such as open banking will help to reduce the risk of chargebacks. This method of payment allows customers to pay directly from their bank account and authorise transactions in real-time. This way, the chargeback risk becomes non-existent. If you are determined to reduce the chargeback risk, it may be a thought to consider.

If we do accept payment via card, what do we need to consider? 

2.  Individuals will likely only resort to raising a chargeback when they have exhausted all other means of getting their money back. 

You have likely experienced it yourself at some point; you can’t get through on the ‘dedicated phoneline’ or, even worse, you get left on-hold for the best part of two hours every time you try and call. All emails receive an automated response and you are simply passed from pillar to post when all you want to do is talk to an actual human being. Of course, customers are going to become exasperated if this happens, and they are going to turn to other means to resolve their issues. 

What customers really want is to be heard and to have their complaints or concerns listened to and addressed. So make sure you have dedicated lines of communication in place to make this process as smooth as possible. A customer who feels valued and looked after is much, much less likely to resort to a chargeback.

3.  Dispute!

If you receive a chargeback notification from your Merchant Services Provider (MSP), and you do not agree that the customer is entitled to a refund, you must dispute it. If you do not do so within the timescales set, the chargeback will be upheld against you and the funds will be debited from your account.

If you receive a chargeback notification – Dispute it!

And knowing how to dispute it and with what supporting information is vitally important also. So, speak with your MSP. Build a relationship with them. Ask them what they need from you to dispute chargebacks on your behalf. This way, you can be prepared and ready, with your evidence in-hand, should a chargeback be received. Did the customer travel? Has a refund already been provided? Did the customer agree to your T&Cs at the time of travel? Can we evidence this? The more succinct you can be with your dispute and evidence, the more likely you are to succeed in defending chargebacks. 

What if a chargeback is upheld against me? 

It is inevitable that some chargebacks will be upheld, for whatever reason. If they are, your MSP will likely have an appeals process available and so make sure you are aware of this as well as the timescales and cost involved. (Some appeals processes are quite expensive.)

If you are a travel agent, consider pushing for an indemnity clause in your agency agreement whereby the principal (e.g. operator, accommodation or car hire provider) agrees to reimburse you for chargebacks wrongly upheld against you. During the pandemic, travel agents were badly hit because whilst they were processing the card payment for customers, they were receiving money on behalf of the principal and they were not responsible for providing the travel services. Having a clause in your written agency agreement which indemnifies you for losses incurred in respect of chargebacks and appealing chargebacks  means that if chargebacks are wrongly made against you, you can be assured that you will be reimbursed for any loss. 

Should you have any chargeback related questions or queries, please contact us via the FREE ABTA helpline on 0113 258 0033, or email