In the past month, COVID-19 has deeply impacted the entire hospitality sector. Related to this, we have seen unprecedented numbers of refunds and cancellations across all territories and properties. We can also see significantly elevated levels of chargebacks (disputed credit card charges by your guests) particularly when properties refuse to refund transactions to customers. While it may be tempting to refuse refunds for cancellations, those chargebacks are actually a huge cost and risk to your business.
As we’ve seen in the past few weeks, the rate of chargebacks has been rising, and we have been closely monitoring this with our processing partners and ultimately the card schemes. Based on their recommendations for how to protect your business, and in order to ensure that we limit these risks for you, we have temporarily stopped all automatic charging done by the Mews Merchant with the exception of virtual credit cards. This ensures that your team has the ability to verify every single booking prior to processing the credit cards via the Mews Merchant, instantly lowering the risks of chargebacks to your business.
Some additional recommendations:
- Continuously communicate: The best way to limit chargebacks is to make sure you’re utilising all of the tools at your disposal in order to communicate with your customers. Take advantage of the fact that customers are likely to have a bit more time for communications and don’t hesitate to keep them updated through all available channels.
- Limit non-refundable rates: Until we get certainty from our governments that borders are open and travel can be resumed, the inflexibility of a non-refundable rate is probably not the right message to send guests at this time. You want to provide as much flexibility as possible in order to allow guests to comply with government guidelines. Note that most OTA’s have already moved to make all rates flexible and are forcing this policy also on hotels.
- Focus on rates with flexible conditions: Give your guests the ability to book early, without the risk of cancellation fees. It will give future guests the confidence to plan their next stay, and you will avoid costly refunds and chargebacks.
- Process payments against reservations only on the day-of-arrival: We see so much volatility in travel at the moment, it’s hard to predict whether a guest will actually be able to reach your property. Therefore we recommend to only process those payments for guests once they arrive. Please note: This is not applicable to virtual credit cards with booking.com as they are now active on the day after arrival.
- Reconsider your no-show policies: While travel restrictions are in place, we have seen elevated chargeback rates for those hotels processing no-show fees. Customers simply use force majeure in order to decline your transactions through their banks. In order to help guests to make reservations early, and with less risk for your business, we suggest a more flexible no-show policy.
We will continue to monitor this situation daily and will adjust these guidelines as required in order to help you mitigate the risks of chargebacks and disputes.
If you have any questions, our Customer Care team will be happy to assist you 24/7 throughout this crisis.