Restaurant Processing Chargebacks Guaranteed Reservations Front Desk PMS Integration


One of the dirtiest words in the credit card industry is Chargebacks. Invariably this word comes up often in the lodging industry. Maybe that is why hotels always seem to have those little bars of soap around. Credit Card Processing Services takes a very proactive role in helping your hotel from becoming the victim of unreasonable chargebacks, however we need your assistance in defending them successfully. That is why we want you to be knowledgeable about the special chargeback rules related to lodging establishments.

When you receive a Chargeback Notification or Retrieval Request please be certain to read each one carefully and be sure to respond promptly within the timeframe stated and provide all of the documentation requested on the first request. This is very important because MasterCard and Visa have very stringent rules in allowing our processor to respond favorably. Be certain that requested copies of sales receipts or other documentation is legible and if necessary use a copier to darken the images. During the process of defending the chargeback your materials will be scanned once and possibly faxed twice.

Why do Chargebacks Occur?

In case you are new to credit card processing you may not be aware of why a chargeback occurs in the first place. In every case it is because a cardholder initiated a complaint with their credit card issuer disputing a sale that appeared on the credit card statement. It can be for a whole host of reasons such as they were billed more than they were quoted, the service wasn’t as promised, or even that the cardholder says that they didn’t even stay at the property. Once the cardholder notifies their issuing bank that they are disputing the charge the formal chargeback process is set in motion.

What are the Most Common Chargeback Reasons?

  1. Service Not Rendered – The cardmember’s account was charged for services not provided by the lodging establishment.
  2. No Response to Retrieval Request – The lodging establishment failed to respond or misses the timeframe to provide documentation to the issuing bank.
  3. Late Presentment – The lodging establishment submitted for settlement charges which were for services more than 30 days after they were rendered.
  4. Expired Card – The transaction was submitted for settlement with an expired card or one that was entered incorrectly.
  5. Invalid Transaction – The transaction was completed with an invalid credit card number or it was manually entered incorrectly therefore charging the wrong cardmember.
  6. Duplicate Transaction – The same transaction appears on the cardmember’s statement more than once with no adjustment for the overcharge.


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What are the Best Ways to Prevent Chargebacks

By taking a few reasonable precautions you can prevent many chargeback situations. Here are some suggestions:

  • As each guest checks-in have them fill out and sign a registration card with their guest information including their credit card number.
  • Make sure that all of your front desk personnel are well trained in the proper method for processing credit cards. Keep the terminal quick reference guide in a safe place near the terminal so that new staff can refer to it when a manager may not be available.
  • Make sure that your guests sign their credit card receipt when they check-in or check-out.
  • Always provide guests with a copy of their final bill by either leaving it under their door or mailing it to their home address. Clearly have the hotel’s contact information on the bill so if there is any question they are more likely to call you rather than their credit card company.

Minimizing Chargebacks for No-Shows

One of the most frustrating reasons for receiving a chargeback is when you charge for a no-show and then the customer disputes the charge. So it is extremely important that every prospective guest is informed about your no-show and cancellation policy. If you don’t already have one then you must develop a no-show policy. Put it in writing and post it on your website. Include it in every reservation confirmation that you mail or email to the guest. Whenever you charge a no-show customer for an unused room, the charge should be accompanied by a mailed invoice advising the customer that the charge has taken place along with a copy of the written policy as justification of the charge. That way if the customer later denies the charge the lodging owner or manager can better fight the chargeback by presenting the card issuer with the specific details of the customer’s unused reservation, a copy of the hotel’s cancellation policy, and a copy of the invoice sent to the no-show customer. With this documentation in hand the issuing bank is much more likely in insisting that the customer pay the charge rather than charge it back to the hotel’s merchant account.

It is our hope at Credit Card Processing Services that these tips are helpful to your establishment in preventing unnecessary chargebacks. If you have any questions or comments please feel free to contact Kevin either via Email or by calling 800-717-1245.


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Credit Card Processing Services, Inc. is a
Registered ISO/MSP of Wells Fargo Bank, N.A., Walnut Creek, CA

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