How to minimise chargebacks

A chargeback is a process whereby a cardholder asks his or her bank to dispute a transaction with a merchant, often because of fraud, non-receipt or non-compliant product or service. The bank investigates and may credit the cardholder’s account, reversing the transaction and forcing the merchant to refund the amount. This protects consumers, but can be costly for merchants in terms of fees and loss of goods or services.

How to protect yourself against chargebacks?

Chargebacks are classified and identified by codes. There are numerous reason codes for all chargebacks that can be received. 

  • No cardholder authorisation – Possibility of fraudulent transaction 
  • Goods/Services not as described – Service related 
  • Merchandise/Services not received – Service-related 
  • Goods/services not as described or faulty – Service-related

Service-related chargebacks

These relate to services promised but not provided and/or property-related problems, such as missing services, substandard property, etc. 
How can I defend myself against this type of chargeback? These chargebacks are always linked to services provided, so anything a customer might use to obtain a refund or trigger a chargeback. It’s important to note that most bookings are made in good faith, and that only a very small percentage of them turn into chargebacks. 

To better prepare for the possibility of bad intentions on the part of the customer, we suggest the following :
When a complaint is raised by the customer in the property and then resolved by you, always keep a record of the conversation and the agreement reached between you and the customer. For example, if the customer accepts a partial refund in good faith, a refund applied due to problems with the property, an agreement on a late check due to late cleaning, missing or broken items, heating or air conditioning not working, dirty property, etc.
Keeping a record of what may have happened will help us, as a payment service provider, to contest  the chargeback when it is triggered. The more information you can provide about what may have happened, the better we can defend your interests with the card-issuing bank.

How to defend against fraudulent oppositions?

Fraudulent chargebacks are transactions generally carried out without a 3DS and originating from non-European cards. A chargeback occurs when a customer disputes a credit card transaction with their issuing bank, on the grounds that they did not authorise the transaction, or that the service or product was not as described. While legitimate chargebacks are designed to protect consumers from fraud or unsatisfactory purchases, fraudulent chargebacks can harm businesses financially.

Here are some corrective measures to deal with and prevent fraudulent chargebacks in the hospitality sector

  • Staff training – Ensure that your customer-facing staff are trained and able to recognise the signs of potentially fraudulent behavior. 
  • NON 3DS transactions – Always ensure that all non 3DS transactions are validated and verified at check-in by confirming that the name on the credit card or ID matches the name on the reservation. If the name does not match (which is more common than you might think), a confirmation from the cardholder must be provided. 
  • Implement strict payment policies: Clearly communicate your payment policies to your customers when they make reservations and during the check-in and check-out process. This may include your cancellation policy and any pre-authorisation or security deposit requirements. 
  • Gather customer information: Gather all available information from your customers. This information can be used to verify reservations and transactions in most cases.
  • Always request 3DS, to protect your business against potential fraud,

bandeau e1712219775792

Be vigilant to these fraudulent patterns

  1. A reservation is made 2 to 5 days before arrival and the reservation exceeds 1,500 euros. 
  2. The customer is supposed to be of a certain nationality, but the booking comes from another country. 
  3. The number of arrivals does not match the information provided at the time of booking.
  4. The customer is in too much of a hurry to pay the bill when there is no need to do so.
  5. The customer is unable to provide the necessary documents at check-in.
  6. Customer is unable to provide payment information
  7. Stay informed, keep abreast of industry best practices and emerging fraud trends, and adapt accordingly. 
  8. Several failed or refused payments before the transaction is completed. 
  9. Customer claims the 3DS process isn’t working and asks the merchant to take card details over the phone. 


fluxs transaprent

Preventing and dealing with fraudulent chargebacks in the hospitality industry requires vigilance, clear policies and effective communication with customers and payment processing partners. It’s an ongoing effort to protect your business from financial losses due to fraudulent chargebacks.

How does the chargeback procedure work?

  1. Receiving chargeback notification: The procedure begins when we receive a chargeback notification from the card issuer. 
  2. Gather documentation and evidence: Gather all documents and evidence relating to the disputed transaction. SysPay needs the information in time to represent the chargeback. 
  3. Analyse the reason for the chargeback: Examine the reason for the chargeback and categorise it. 
  4. Is it a legitimate chargeback? Determine whether the chargeback is valid, fraudulent or unjustified. 
  5. Resolve the chargeback (valid): If the chargeback is legitimate, resolve it by issuing a refund or taking other appropriate action. 
  6. Update records: Update your transaction and records accordingly. 
  7. Contest chargeback (invalid): If the chargeback is invalid, prepare and send a rebuttal to the issuer. 
  8. Wait for issuer response: Wait for the card issuer to respond to your challenge.
  9.  Review issuer’s decision: Evaluate the issuer’s decision regarding your dispute. 
  10. Has the dispute been resolved? If the dispute is successful, resolve the chargeback, update the records and terminate the procedure. 
  11. No (Dispute Not Successful): If you believe that a chargeback is unjustified and you have the necessary evidence to demonstrate that the chargeback is fraudulent on the part of the customer, we have the option of escalating the case directly to the card schemes such as VISA and MasterCard. This procedure is called arbitration. This means we can involve Visa or MasterCard. However, it is important to understand that once a dispute has reached this stage, if the claim rejection is lost, you will be liable for the value of the claim rejection of € 420 administrative fee.

At SysPay, we are committed to protecting you against 1st and 3rd party fraudulent intentions. To do so, your cooperation is of the utmost importance, and our team is available to answer any questions you may have. 

Disclaimer: This document is intended as a guide and has no legal bearing on the outcome [positive or negative] of chargebacks represented on your behalf. It has been created to help you better understand the process and how best to approach it. 

Disputes with card schemes, payment service providers and customers. Merchant shall, at its own expense, provide SysPay with all reasonable assistance in resolving any disputes arising under the rules of card schemes and/or the rules of payment service providers. SysPay has full discretion, in relation to the Merchant, to decide to resist, defend against or compromise any claim by a card scheme, customer, cardholder, issuer or payment service provider, and SysPay’s decision shall be binding on the Merchant. Without prejudice to the indemnities set out in clause 11.1, the Merchant also agrees that SysPay shall have the discretion to accept, dispute, compromise or otherwise deal with any claim made against the Merchant and/or SysPay arising out of a Transaction accepted by the Merchant for a Loss or liability therefor on behalf of the Merchant.

Become a SysPay Partner!

Your personalized quote

Contact our commercial service