Overview
A chargeback occurs when a card issuer reverses a payment after the cardholder disputes a transaction on their account. When a dispute is raised, the payment is temporarily reversed while the property has the opportunity to defend the transaction and resolve the issue.
3DS Verification
RMS Pay secures all online payments for card-not-present transactions using 3DS (Three-Domain Secure). 3DS adds an extra layer of security by requiring the cardholder to manually enter a secure code provided by the card issuer during the transaction process. This verification step ensures the cardholder authorises the transaction, helping to prevent fraud and reduce the likelihood of chargebacks.
The enforcement of 3DS verification is determined by the card issuer’s fraud detection systems, which use advanced security and risk assessment algorithms to evaluate whether the transaction is considered high risk and requires additional verification from the cardholder.
Your underlying payment security - card data encryption, PCI compliance, and all other fraud controls - remains fully intact.
Chargeback Reduction
Disputes on legitimate transactions can be avoided or minimised by implementing the following as part of the procedures at the property:
Transparent & Accessible Policies
Clearly communicating your policies helps set guest expectations and provides evidence that charges were disclosed before the reservation was made.
- Clearly outline your payment, refund, cancellation, and no-show policies in the Terms & Conditions guests accept during the reservation process. Make these easy to access on your website, booking channels, confirmation emails, and guest correspondence.
- Publish your Terms & Conditions in the RMS Booking Engine and Guest Portal so guests can review them before completing their reservation.
- Process no-show and cancellation charges within the timeframes defined in your policy.
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Avoid charging for incidentals after check-out unless you have documented evidence and have notified the guest beforehand.
Verify Guest Identity
Matching the name on the payment card to a photo ID at check-in is one of the most effective ways to prevent fraud.
- Validate the ID in line with your property's privacy policy.
- If a third-party card is being used (e.g. a corporate or family member's card), ensure you obtain the relevant authorisation before check-in.
Registration Cards, Signatures and Correspondence
In a chargeback dispute, your documentation is your evidence. The more complete and up-to-date records you have, the stronger your case will be with the card network.
- Retain a booking confirmation showing the guest accepted your booking terms, conditions, and cancellation policy.
- Maintain a digital or paper registration card with guest details, signatures, and photo identification where collected. If using paper registration cards, ensure they are securely retained.
- Keep check-in and check-out records, including any digital or physical signatures confirming the guest's stay.
- Retain payment receipts, authorisation records, and signed payment documents where applicable.
- Keep written correspondence relating to charges, cancellations, modifications, or disputes.
Deposits & Pre-Payments
Collecting a deposit or prepayment at the time of booking creates a record that is tied to the reservation, and can demonstrate that the guest agreed to pay if a charge is later disputed.
- Use the RMS Booking Engine, Guest Portal, or RMS Pay By Link to securely take payment from the guest. When processed through RMS Pay, these payment channels support 3D Secure (3DS) authentication where applicable, helping verify the cardholder's identity and reduce the risk of fraud and chargebacks.
- Configure your deposit rules in RMS under Setup > Online Bookings > Online Options > Deposits.
- Deposits are especially important for no-show risk - if a guest doesn't arrive, a held deposit supports your ability to charge.
Take an in-person payment with an RMS Pay terminal
Pre-Authorisations
Taking a pre-authorisation hold reduces your exposure on reservations that carry higher risk - such as large group bookings, last-minute reservations, or bookings from OTA channels.
A pre-authorisation is ideal when the final charge amount is not yet known, such as for accommodation with incidentals or variable charges.
- Take a pre-authorisation using an RMS Pay terminal while the cardholder is present. This allows you to verify the cardholder's identity and obtain authorisation for the hold.
- A pre-authorisation does not charge the guest but verifies the card is valid and that sufficient funds are available.
- Use pre-authorisations for short-term holds, such as incidentals during a guest's stay. As pre-authorisations typically expire after several days (depending on the card issuer), they are not suitable for extended holds.
- For long-stay guests or situations where funds need to be held for longer, take payment as a Refundable Charge. If no incidental charges are incurred, the deposit can be applied to the reservation or refunded to the original payment card.
Refunds
Promptly processing any refund owed to a guest helps minimise the risk of a disputed transaction. Delays in issuing refunds may lead the cardholder to dispute the transaction with their bank to recover the funds.
Refunds processed through RMS Pay will automatically be credited back to the card used for the original payment.
Common Fraud Signals
Some reservation patterns are associated with higher fraud risk. No single signal is definitive, but a combination of the following warrants closer review before processing a charge.
Booking made with a different name than the cardholder
Multiple bookings from the same card in a short timeframe
Requests to charge a different card than the one on file
Last-minute or same-day bookings for extended stays
Billing address that doesn't match the stated guest location
Chargeback Management
Chargeback Management is available when using RMS Pay as the payment gateway, simplifying the process of viewing, managing, and defending chargebacks issued to the property. User access to the Chargebacks screen can be controlled through Security Profile privileges.
The timeframe for defending a chargeback varies depending on the card scheme (e.g., Visa, Mastercard, American Express), and the required supporting documents will differ based on the nature of the cardholder’s dispute.
Common Transaction Disputes
The most common reasons for a transaction dispute leading to a chargeback include:
- Fraud — including perceived fraud.
- Dissatisfactory Service.
- Untimely Refunds.
- Unclear Cancellation or Deposit Policy.
- Duplicate Charges.
- Reservation Cancellation.
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