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How to Reduce Chargebacks for Serviced Accommodation

By Becca Winkler.
Last Updated 09 Sep 2024
- minute read

Credit card chargebacks can leave businesses with a loss of income. Whilst some guests will try to get a chargeback without a valid reason, there are many reasons a guest may request a chargeback. We’ve put together this guide to help you understand why your guests may be requiring a credit card chargeback, and provide you with tips to help reduce the number of chargebacks your serviced accommodation business receives.

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What are credit card chargebacks?

Card chargebacks are the process of reversing funds from a credit or debit card issuer back to the cardholder after they dispute a charge. Unlike a refund, which is initiated by the business, a chargeback is initiated by the issuing bank. The bank then holds onto the money whilst undergoing an investigation into the legitimacy of the dispute. If the claim is found to be valid, they will issue the funds back to the customer.

Why do chargebacks occur?

Chargebacks occur to rectify credit card fraud and accidental duplicate charges. When chargebacks were first introduced to consumers as an option, is was to encourage trust between the customer and their credit card company. Knowing that they could get their money back, makes people feel safer.

What are common chargeback reasons?

Here is a list of reasons why a guest of your serviced apartment may chargeback:

  • Fraud (the charge was not authorised by the cardholder)
  • The guest requested a refund but it took longer than expected
  • The guest was displeased with the serviced accommodation or an aspect of their stay
  • Accidentally charged twice for their stay

“Friendly fraud” is the term given to legitimate reasons for requesting a chargeback that isn’t actually fraud.

Why are chargebacks bad for serviced accommodation businesses?

Chargebacks are bad for serviced accommodation businesses because they result in a loss of income. Time and energy is also spent trying to solve these issues, and the cost of payment processing providers, you could loose a large amount of money.

Not only will your business loose the income from the guest, it may result in negative reviews, discouraging future guests from staying too. In the case of legitimate fraud, this means you have a security problem, and will need to be addressed immediately. This too will cost the business.

How to reduce chargebacks for serviced accommodation

There are a number of ways to reduce chargebacks from guests who stay at your serviced accommodation. Below, we have listed ways you can reduce chargebacks.

Guest screening and verification

Use automated software that can screen your guests and flag any potential problems. Implement an ID verification system at check-in. By requesting a valid form of ID, you can ensure the name on their identification matches the name on the credit card used for the booking.

Transparent billing

Be clear and transparent with the billing. Ensure the company’s name and contact details appear clearly on the credit card statement. This will help to avoid any confusion.

Clear payment and refund policies

It is vital that your guests understand the payment and refund policies that are in place when they make a booking. Make sure your terms and conditions are clearly stated on your website and that the guest receives a copy in an email, along with their booking confirmation. Providing evidence that the guest agreed to the terms and conditions with work in your favour.

Dispute management

Train staff and develop a quick and effective process for handling chargebacks. Have a system in place to gather evidence and documents that are necessary to contain the illegitimate claims.

Detailed communication and record-keeping

Establish a good form of communication with the guest from the get go. You can use automated messaging to confirm bookings, but you need to make sure you are maintaining all digital records of the communications that you have with guests. If you have phone calls with guests, these should preferably be recorded – with their knowledge and permission.

Accurately describe the serviced accommodation

An honest and accurate description of the property your guest will be staying in will help to reduce the risk of chargeback. Using clear, high quality photos to represent your serviced apartments online also bring clarity to the guest. Be truthful about any potential issues.

Exceed guest expectations

When guests book serviced accommodation they already have expectations when they arrive at the property. Take the time to exceed their expectations and provide them with the best experience. Leaving some general groceries like fruit in a fruit basket or a loaf of bread on the kitchen counter, can go a long way in showing your guests that you care.

Use property management software

If managing multiple serviced apartments has become too chaotic, use a property management software. Not only can you streamline guest communication, which will help with what we mentioned earlier, but it will help to take some of the pressure off of you, and most of these software companies are well equipped to handle chargebacks. We recently published a blog post all about the best property management software in the UK, so it might be worth checking that blog post out too.

Follow up with a survey

After the guest has stayed, it may be beneficial to follow up with a post-stay survey. This will give the guest the opportunity to raise any concerns that they may have. Allowing them to directly speak with the company reduces the risk of them processing a chargeback.

By following these tips, you should see less credit card chargebacks from the guests that stay at your serviced accommodation. If you are looking for ways to remove even more stress from your property manager life, why not bundle all the utility bills across your entire portfolio, and condense them down into one single digital monthly payment? Resooma can help you do exactly this! To learn more click here.

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