Travel companies have seen a significant increase in chargebacks in the past couple of years, according to a study.
Outpayce, the payments business of Amadeus, surveyed travel executives to uncover that 71% of companies have seen an increase, with disputes growing 30% year over year including 2022 compared to 2021.
Almost two-thirds (62%) of airline and travel agency leaders who participated in the study said travelers perceive chargebacks to be easier than getting a refund, while 56% said there’s a heightened awareness of the chargeback process amongst consumers.
A third driver of the increase was the ease of raising a chargeback through mobile banking apps, according to 42%.
When it comes to challenging chargebacks, about a quarter of travel companies see a successful outcome for more than 60% of disputes. Almost half of companies said less than 40% of chargebacks go in their favor.
Tania Platt, senior vice president for commercial for Outpayce, said: "A requirement to invest in additional skilled resources coupled with the difficulty collecting the travel and payments information needed to contest chargebacks are resulting in low success rates.
"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 [terms and conditions] 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."
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While the study drew insight from a small sample, 46 leaders from airlines and travel agencies, it highlights a big issue for the industry.
Justt, a startup in the space that announced $70 million in funding in late 2021, saw chargebacks skyrocket during the pandemic.
Chargeback Gurus, another company specializing in credit card fraud, said travel companies can take steps to mitigate their exposure including being conscious of the factors that lead to chargebacks.
The airline industry is believed to lose $1 billion annually through credit card fraud.