Anecdotal stories suggest chargebacks in travel have increased since the disruption experienced during the COVID-19 pandemic. Now, new research confirms most travel companies (71%) have indeed seen growth in chargebacks over recent years, with disputes surging at a rate of around 30% year-over-year, according to the global study with airlines and travel agents.
When asked to explain the rapid growth, travel companies pointed to travelers perceiving chargebacks as easier than seeking a refund (62%), increased traveler awareness of the chargeback process (56%) and the ease of raising a chargeback through a mobile banking app (42%), as the top three drivers.
The study also highlighted the low ‘success rate’ travel companies achieve when challenging chargebacks. Just a quarter of travel firms see more than 60% of disputes awarded in their favor and nearly half of the firms surveyed see less than 40% of the chargebacks they choose to contest awarded in their favor.
Tania Platt, Senior Vice President, Commercial, Outpayce from Amadeus commented: “Our research shows travel companies are finding it hard to handle the volume of disputes they’re seeing. A requirement to invest in additional skilled resources, coupled with the difficulty to collect the travel and payments information needed to contest chargebacks are resulting in low success rates. There’s a real opportunity for the industry to take a step back and ask how it can industrialize chargeback management.”
She continued: “When we look at an airline, throughout the transaction process, the airline knows if the cardholder authenticated, it knows if the payment was authorized, it knows if its T&Cs were presented and if the traveler boarded the plane. The difficult part is collating the information in a timely manner to effectively contest those chargebacks where the travel merchant isn’t at fault. Solving that problem has been a major focus for us over recent months.”
More than two thirds of respondents agreed that being quickly provided with key travel and payments information, like proof of payment authorization and proof the passenger boarded the plane, relating to each new chargeback would increase their firm’s efficiency when managing chargebacks.
What is a chargeback?
Cardholders have the right to dispute a transaction by raising a ‘chargeback’ via the bank that issued their card. When this happens a standard dispute process is initiated, and the travel company has a certain amount of time to collate the evidence needed to contest the chargeback. If the travel merchant is unable to provide the required evidence in a timely manner, the funds are automatically returned to the cardholder.
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