The 5 Best Chargeback Management Software Vendors
By Jordan Hollander
Last updated September 06, 2023
6 min read
How can you make chargebacks less painful to deal with? The hotel industry loses as much as 5% of revenue each year due to fraud. Although they’re frustrating to handle, chargebacks are an inevitable occurrence when you accept credit cards. Hotels of all types get hit with chargebacks from time to time. Although it’s impossible to eliminate the risk of chargebacks completely, unless you decide to not accept credit card payments, it is possible to partner with software that helps your hotel minimize the risk of chargebacks and handle them more efficiently. Chargeback management software might not be the sexiest addition to your tech stack, but the benefits to your operational efficiency, guest experience, and bottom line mean you can turn a big headache into an easy-to-handle process. In this article, we’ll introduce you to chargeback software and recommend the top vendors for hotels like yours.
Why do chargebacks occur?
Let’s take a step back: what is a chargeback? In simple terms, a chargeback happens when a customer disputes a credit card charge with their bank, meaning they want the bank to reverse the charge. The bank then initiates a dispute with the merchant to investigate whether the charge was legitimate or not. In the hotel context, chargebacks often relate to cancellation policies or problems during the guest’s stay. For example, a guest who didn’t realize they booked a non-refundable reservation might try to cancel it, and the hotel might decline to offer a refund, citing the non-refundable policy. If the guest opens a dispute with their bank, they would have to prove that the non-refundable policy was not clearly disclosed to win the dispute and reverse the charge, and the hotel would have to prove the non-refundable policy was clearly disclosed to win the dispute and keep the funds.
Many chargebacks look like the situation we just described: customer or merchant error. However, some chargebacks are due to fraud. Criminal fraud occurs when a bad actor steals someone’s credit card information and, for example, books a hotel stay. The credit card holder notices this strange charge on their credit card statement and opens a dispute with their bank. In this case, as long as they can prove they did not make the charge, the credit card holder usually wins the dispute and the hotel is obligated to refund the stay. Friendly fraud also happens; this is when a consumer knowingly exploits the system to get credit card charges reversed. In all cases, the hotel is obligated to participate in the investigation, provide documentation, and issue the refund if the bank wins the dispute.
What options exist for chargeback management?
Now that you understand why chargebacks happen, you probably want a better way to manage them. Even better, you want to prevent fraudulent charges before they happen. Three styles of chargeback management can help ease the pain of handling credit card disputes:
Software as a service: In this model, your hotel would buy chargeback management software and own the chargeback process. This option provides flexibility and control for your hotel, but it also requires more time investment and training. Depending on which software vendor you choose, you might have limited support options or inconsistent results.
Fully managed: If a more hands-off approach suits your hotel, you can outsource your dispute handling completely. A fully managed chargeback management system means a company that specializes in chargebacks handles all of your disputes on your behalf. While this option costs more than the SaaS model, it removes the responsibility of handling disputes from your finance team and can yield better results (i.e. fewer losses).
Hybrid options: If neither fully managed or fully in-house options are the right fit for your hotel, a hybrid approach to chargeback management might make sense. A hybrid approach puts some aspects of dispute handling in the hands of outsourced experts, while some responsibilities stay in-house. This setup allows you to still have a degree of control over the process but decreases the amount of time required from your in-house team.
What are the best chargeback management vendors for hotels?
After learning the lay of the land of chargeback management, you might be wondering which vendors are a good fit for hotels. Since chargebacks happen in every industry that accepts credit card payments, some software is designed for specific industries, while other vendors serve many industries equally well. Let’s take a look at some of the best choices for hotels.
Are you still asking guests to fill out paper or PDF credit card authorization forms? If so, then you’re risking fraudulent charges and security breaches. Canary’s Digital Authorizations tool lets you securely send digital, PCI-compliant CCA forms that reduce your risk of chargebacks from the start. In addition to modules like online check-in, guest messaging, and upsells, Canary is an all-in-one solution for hotels looking to upgrade and consolidate their tech stack. While Canary is great at preventing chargebacks, it does not offer fully managed dispute handling services, which means that responsibility would still fall to your accounting team. Canary was the #1 winner at the 2023 HotelTechAwards in the Cyber Security & Fraud Prevention category.
Trusted by brands like Marriott and Hilton, Sertifi is a solid solution for hotels looking for a more secure credit card authorization process. While Sertifi doesn’t handle chargebacks on your behalf, the app does greatly reduce the risk of getting chargebacks by encrypting card details and assessing the potential fraud risk of each credit card transaction. Sertifi works well not only for hotels and resorts, but also for event planners, venues, and other hospitality vendors that take credit card details for prepayments or deposits. As a bonus, Sertifi integrates with PMSs like Opera, Amadeus, and Infor.
An industry leader in fully managed chargeback services, Chargeback Gurus are what they say they are – experts at navigating the chargeback process and winning disputes. Chargeback Gurus boasts that they win more than three times the disputes than the industry average, so you can expect better results than if you handle the process in-house, although you will pay more for the service than you would if you kept things in-house. That being said, Chargeback Gurus offers flexible terms and pricing models so you can find a price that fits your budget.
Maybe you already have a tech-driven solution for CCA forms, but you’re looking for a vendor to manage your chargeback process entirely. Signifyd helps you prevent chargebacks due to fraud – and helps you recover disputed funds for reasons like cancellations and booking errors. The system integrates with your payment gateway (such as Stripe) and provides expert guidance on your processes and documents. Signifyd clients can win disputes up to 50% more often than before using the service.
Online travel sites like Trip.com and Lastminute.com use Riskified to handle disputes, which shows that Riskified is a trustworthy vendor that can handle chargeback management for any travel industry business. The Riskified dashboard centralizes all information about chargeback cases so your team can monitor status, add documentation, and track results over time. The platform allows you to automate several steps of the dispute process, saving time for your team. If you aren’t interested in fully outsourcing chargeback management but want a more efficient system than your current manual process, Riskified can be the perfect happy medium.
Ready to start winning more chargebacks and losing less money to fraud? Read reviews of cyber security and payment protection vendors from real hoteliers like you.
Here's Why Your Hotel Should Be Automating Chargeback Management Right Now
Chargeback management software is crucial for hotels, especially in the ever-evolving landscape of ecommerce and online payment processing. Hotels rely on revenue to thrive, and chargebacks pose a significant threat to their bottom line. Here's why mitigating chargebacks and automating the process with chargeback management software is essential:
- Revenue Loss Prevention: Chargebacks can result in substantial revenue loss for hotels. When a guest disputes a transaction with their credit card issuer, the hotel often loses the payment. Chargeback management software helps prevent chargebacks and recover lost revenue.
- Real-time Fraud Prevention: In the digital age, fraudsters continuously target online transactions. Chargeback management tools leverage machine learning and fraud detection algorithms to identify and prevent fraudulent transactions in real-time, safeguarding the hotel's revenue.
- Streamlined Workflows: Automation of chargeback responses and dispute management streamlines internal processes. It saves time, as manually managing chargebacks can be time-consuming, allowing hotel staff to focus on providing excellent customer service.
- Enhanced Customer Experience: Effective chargeback management ensures that legitimate customer disputes are addressed promptly and fairly. This positively impacts customer satisfaction, as guests see that the hotel takes their concerns seriously.
- Friendly Fraud Mitigation: Friendly fraud occurs when customers falsely dispute charges. Chargeback management software can help hotels fight chargebacks stemming from friendly fraud by providing evidence to cardholders and issuers.
- Prevent Chargebacks with Reason Codes: Understanding the reason codes for chargebacks is crucial. Chargeback management tools often provide detailed analytics and insights to pinpoint the root cause of chargebacks, enabling hotels to proactively prevent them.
- Notifications and Alerts: Chargeback management software sends real-time notifications and alerts when chargebacks are initiated, enabling the hotel to respond promptly and effectively to disputes.
- Fraud Protection: In addition to preventing chargebacks, these tools offer comprehensive fraud protection to safeguard against fraudulent chargebacks.
- Win Rates Improvement: Chargeback management solutions help improve win rates in chargeback disputes. They provide the necessary documentation and evidence to representments, increasing the chances of a successful resolution.
- Integration with Payment Processors: Many chargeback management software solutions offer APIs that integrate seamlessly with payment processors, ensuring that chargeback information is readily available and up-to-date.
- Outsourcing vs. In-house: Hotels can choose whether to manage chargebacks in-house or outsource to specialized firms like Chargebacks911 or Midigator. The software allows for flexibility in deciding which approach best suits their business needs.
- Small Businesses Benefit: Even small hotels can benefit from chargeback management software, as it provides access to the same fraud prevention tools and expertise that larger retailers use.
- SaaS Solutions: Many chargeback management tools are offered as Software as a Service (SaaS), making them cost-effective and accessible to hotels of all sizes.
Chargeback management software is indispensable for hotels to protect their revenue, prevent fraud, enhance customer satisfaction, and streamline their chargeback process. It is a vital component of modern ecommerce and online payment operations, helping hotels stay competitive and profitable in a rapidly evolving industry.