Forum Moderators: buckworks
Our travel site has a cancelation policy much like those of others however I have gotten into a strange situatiom.
I was under the assumption that if we had our policies clearly marked and if client accepted conditions then we could charge the appropiate penalty if a client cancelled.
Visa Card Europe informed us through our Merchant bank that visa has strick guidelines in regards to hotels and reservation services. What it basically come to what they told me that if cardholder cancels more then 24 hours before arrival no fee or charge can be done to client and we are required to refund the client in full, 100% as services were not rendered.
Obviously there are some problems
1) They charge us first when we take the money and now again when we refund. I dont accept that we are the ones that have to pay this fee (twice!). If they care so much for their client then dont charge us for the transactions, greedy #*$!s.
2) Many hotels in peak season do not refund and as they have our money there will be a problem. Client will chargeback and meanwhile hotel keeps their money. This is a nightmare. I told them this and they said that they arent interested as that has nothing to do with visa card.
So anyway, I asked them since when is this, many sites including the American Giants have cancelation fees, admin fees etc etc and i asked what about the agreement between client and us. They told me its not valid and Visa Card Association has its own rules and guidelines and if you dont agree and work along those rules then we are not allowed to process their cards. When i asked our Merchant bank about the losses they said that Visa considers Merchants to be the one with money and they will most allways chose side of pax.
I tried to be creative so I told them, I am not hotel, we assist the client in obtaining a room at a great rate and we pay the hotel on their behalf. The mark up is our fee for this reservation assistance so if client cancels then we will gladly assist however our fee was in fact not part of accomodation and it was allready a service used. If the hotel does not agree top refund then client should demand the funds there, not from us.
Guys, i have been in the travel and hotel indutry for years and we have often charged client before arrival and charges them a fee if they cancelled. Is there a back door to cover my backside?
This happened to us not too long ago. Client booked 2 rooms at a hotel and total bill was nearly 12000 USD. Then a few weeks later she cancelled but still enough in advance to not have to pay a actual cancelation fee by the hotel but we did hold back on our 5% as per our policy as this would infact only cover the cost of the transaction. (1200 USD +/-) Any client doesnt accept, goes to visa USA and I get letter here informing us that they are now taking back the funds. We werent even allowed to contest the chargeback. They did it automatically and the reasons where as I described above. (more then 24 hours before arrival must return 100% and services werent uses)
What the heck can i do?
I would see it this way:
A client reserves a room and then cancels the reservation. He still owes you your fee. If the person makes a chargeback you can not dispute it at VISA because of your contract with VISA. However that changes nothing at the fact that the guy who did the reservation owes you the money.
So all you can possibly do is send a demand note and if the person is not willing to pay, go to court. That you cannot get your money through VISA does not mean you have to waive your claim.
as services were not rendered
We counter that the customer made a reservation THROUGH US, not the hotel- not much different than buying from a retailer instead the manufacturer for products. The services rendered were:
- convenience of not having to deal with the hotel directly (our niche is inbound travel where the customers usually don't speak the local language)
- negotiated a lower price than they could get by contacting the hotel directly (not always)
It's been reveresed about 50% of the time.
Several times we've considered trying to do something creative like charging a $25 upfront, non-refundable booking fee that is applied to the reservation amount if not cancelled. But each time we concluded that it's too confusing to the customers and would end up losing more in sales than we might save from avoiding chargebacks (especially since there is no guarentee that it would actually work). SO I would also be interested in any other options that would fly.
Although for most intents and purposes, Visa and MasterCard are pretty much the same, we've found MC to be more pro-travel. I'd have to check to make sure, but most of our problems have been with Visa. MC has also been a sponsor at a number of travel industry shows I've attended.
Dont post a cancellation policy at all, this would probably solve some of the problems.
If you dont offer a cancellation policy then you dont accept cancellation information.
When a customer makes a reservation they have bought the the product as far as Visa is concerened (I think).
Who cares if they show up and who would be willing from Visa to investigate whether they showed up at the hotel?
-Corey
One thing to be very careful - if you are charging your clients for for fees and then turning around and paying the hotels, etc - they might consider you an aggregator or factoring. And this could ause you even more problems
why?
I would look at the operation as whole to see whether there are steps that can be taken to minimize risk of loss.
1. Charge the customer as late as you can so that no CC charges are incurred in the event of a cancellation before his card is charged.
2. Put off paying the hotel as late as you can
3. Insists on T/T payments for amounts about a certain value unless it is from known customers who are highly reliable.
-Corey
