Mastering chargeback management in hospitality

Hospitality and travel suffer from the highest average chargeback value of any industry, according to Mastercard’s 2025 state of chargeback reports.

Globally, the average cost to a business in this sector stands at an eye-watering average of $120 per chargeback (data is only available in US dollars).

That’s the total cost – so includes the cost of managing the dispute as well as any loss of trade.

The costs are, on average, higher in the United States than Europe. In the US, it costs an average of $110 per chargeback for all industries, compared with $82 in the UK.

By comparison, according to Mastercard’s report, the average cost to a merchant of a chargeback is $84 in the retail sector, $77 for digital goods and $69 for subscription services. 

So why are chargebacks so much more expensive in hospitality and travel sector?

“There are several reasons why costs are higher for our industry,” says Paul Ferguson, Head of Enterprise Hospitality at Elavon Europe.

The hidden costs of chargebacks

Chargebacks are more than lost revenue. They involve administrative costs, reputational damage, and operational disruption. Understanding these impacts is the first step toward proactive management.

Direct financial losses can come from:

• Transaction reversals: loss of revenue from the original transaction
• Chargeback fees: Processors often charge a fee for each dispute, regardless of the outcome
• Operational costs: Time and effort spent gathering documentation, responding to disputes, and managing follow-ups

Hidden operational costs can come from:

• Staff time: Employees must divert attention from guest services to handle disputes
• Training gaps: Inadequate training can lead to errors that increase chargeback risk

To improve customer communications and proactively maintain documentation, hotels should:

• Make booking terms and conditions, cancellation policies and refund processes, clear simple and readily available. You can always make guests click-to-accept terms and conditions on online booking platforms
• Verify online bookings with personal identification and payment card at check-in
• Accept in-person payments only with the physical card present
• Maintain detailed transaction records for every customer – including receipts, invoices and guest communications
• Ensure receipts and folios are clear and legible
• Address guest complaints quickly and professionally
• Use the correct DBA name for cardholder recognition on billing statements.
• Train staff to identify red flags and handle disputes
• Monitor chargeback trends to prevent future fraudulent disputes

Sticking to these top tips not only can help to reduce chargebacks but can also improve the overall guest experience.

Responding to chargebacks effectively

Even with the best plan and customer service, you’ll likely still have to deal with chargebacks and when you do, it’s important to act promptly and thoroughly; it is possible to resolve a dispute without losing the sale. Consider these best practices:

• Review and understand the reason code to ensure your response is appropriately tailored to the customer situation
• Gather all documentation related to the customer transaction as evidence of fulfilled services. This includes receipts, confirmations, and communication logs
• Organise evidence clearly and highlight key points to both the card issuer and the customer. When possible, communicate directly with the guest to try and reduce escalations
• Follow issuer guidelines and meet submission deadlines to avoid automatic losses
• Provide all relevant documentation during the first chargeback cycle, as it may not be reviewed during the pre-arbitration phase
• Don’t store records by cardholder name, as payment processors do not always receive the cardholders’ names with a dispute
• If a customer disputes a transaction and you accept being debited for the amount, do not also issue credit to the cardholder. The customer will be credited via the dispute process