Few industries are as complex from a payments perspective as travel.
Unlike traditional retail, where products are purchased, delivered and consumed within days, travel transactions often involve long booking windows, multiple suppliers, high average order values and significant operational complexity. A holiday booked today may not be taken for another twelve months. Between booking and departure, airlines may alter schedules, hotels may change ownership, geopolitical events may intervene, weather may disrupt itineraries and customer circumstances may change.
Against this backdrop, it is hardly surprising that chargebacks remain one of the most significant financial and operational challenges facing the travel industry.
Chargebacks were originally introduced to protect consumers from fraud and merchant failure. They remain an essential consumer protection mechanism. However, for travel businesses, chargebacks have increasingly become a major source of cost, risk and operational burden.
According to Mastercard, the total global cost of chargebacks is expected to rise from US$33.8 billion in 2025 to more than US$41 billion by 2028. Almost half of all chargebacks are now believed to involve some form of fraud or first-party misuse. Travel and hospitality businesses also experience the highest average chargeback value of any sector, with disputes averaging approximately US$120 each.
For travel merchants already operating within highly competitive markets and often on relatively tight margins, the financial impact can be considerable.
Every industry experiences chargebacks, but travel presents a unique set of challenges.
Firstly, travel transactions are typically high value. A family holiday can easily cost several thousand pounds, meaning a single dispute can have a significant impact on revenue and cash flow.
Secondly, the gap between booking and fulfillment is often lengthy. The longer the time between payment and travel, the greater the likelihood that circumstances may change. Customers may forget they made the purchase, fail to recognise a transaction on their card statement or seek alternative routes to obtain a refund when plans change.
Travel also involves multiple stakeholders.
A single booking may include flights, accommodation, transfers, excursions, insurance and ancillary services, often supplied by different organisations across several jurisdictions. When something goes wrong, determining responsibility is not always straightforward.
Common causes of travel chargebacks include:
The card-not-present nature of most travel sales adds another layer of risk. With the majority of bookings now made online or over the phone, merchants must manage significantly higher fraud exposure than businesses operating in face-to-face environments.
As ecommerce fraud continues to rise globally, travel businesses are increasingly finding themselves at the sharp end of the problem. Juniper Research forecasts that fraudulent ecommerce transactions will exceed US$131 billion globally by 2030, driven in part by growing levels of friendly fraud and increasingly sophisticated criminal activity.
The travel industry experienced unprecedented levels of chargebacks during and immediately after the COVID-19 pandemic.
Mass cancellations, border closures and widespread travel disruption placed enormous strain on businesses across the sector. Many travel companies faced the challenge of refunding significant volumes of bookings at the same time as managing severe cash flow pressures.
In many instances, customers turned directly to their card issuer to recover funds, particularly when refund times were extended or communication broke down.
The pandemic highlighted just how quickly chargeback exposure can escalate during periods of disruption.
While few anticipate a crisis on the same scale again, the events of recent years reinforced the importance of having robust payment strategies, clear customer communication and effective risk mitigation frameworks in place.
Travel remains vulnerable to external events. Extreme weather, geopolitical instability, industrial action and supplier failures all have the potential to trigger large-scale disruption. Businesses that proactively plan for these scenarios are typically far better placed to manage disputes and protect both revenue and customer relationships.
When many businesses think about chargebacks, they focus on the value of the disputed transaction.
In reality, the true cost is often significantly higher.
A successful chargeback can result in:
There is also the considerable operational burden.
Payment teams can spend hours gathering booking confirmations, customer correspondence, supplier invoices, proof of travel and supporting documentation simply to defend a single dispute. Even then, there is no guarantee of success.
For businesses managing hundreds or thousands of transactions each month, the resource requirement quickly becomes substantial.
Excessive chargeback levels can also damage relationships with acquirers and card schemes. Merchants exceeding established thresholds may be enrolled into monitoring programmes operated by Visa and Mastercard, potentially resulting in fines, additional scrutiny or, in severe cases, termination of acquiring facilities.
For travel companies dependent on card acceptance, this represents a serious commercial risk.
Perhaps the most significant development in recent years has been the growth of first-party fraud, often referred to as friendly fraud.
Friendly fraud occurs when a legitimate customer disputes a genuine transaction.
In some cases, this is accidental. A cardholder may not recognise the merchant descriptor appearing on their statement or may simply forget they authorised the transaction.
Increasingly, however, disputes are intentional.
Examples include customers claiming:
The increasing simplicity of initiating disputes through banking apps has undoubtedly contributed to the issue.
Consumers can now raise disputes in a matter of minutes, often without first contacting the merchant. Unfortunately, many businesses only become aware of a problem once funds have already been removed from their account.
Mastercard estimates that fraudulent chargebacks will cost businesses approximately US$15 billion globally during 2025 alone. Nearly half of all chargebacks are now reported as fraudulent in nature.
Travel businesses are particularly vulnerable because proving fulfillment often requires evidence from multiple suppliers and jurisdictions.
Against this increasingly challenging backdrop, many travel businesses are reassessing how they manage payments and financial risk.
One model gaining significant traction is the Merchant of Record, or MoR, model.
Traditionally, most travel businesses operate under a standard acquiring arrangement. Under this structure, the travel company itself is the merchant. It accepts customer payments directly and assumes responsibility for all associated payment obligations.
This includes:
For larger organisations with dedicated payments and risk teams, this model may be entirely appropriate.
However, for many travel businesses, particularly those expanding internationally, operating across multiple markets or selling through complex distribution ecosystems, the operational burden can become significant.
Under a Merchant of Record model, a specialist payments provider becomes the legal seller of record for the transaction. The customer pays the Merchant of Record, which then settles funds to the travel business in accordance with agreed commercial arrangements.
While structures vary between providers, the Merchant of Record typically assumes responsibility for a substantial proportion of the payment lifecycle, including processing payments, managing fraud controls, administering chargebacks and maintaining compliance with card scheme requirements.
From a practical perspective, this can fundamentally change the risk profile of a travel business.
Instead of building and maintaining extensive in-house payments, fraud and compliance infrastructure, businesses can leverage the expertise, technology and operational capabilities of a specialist provider.
The benefits often include:
Because the Merchant of Record assumes responsibility for managing payment disputes and associated liabilities, merchants can significantly reduce their direct financial exposure.
This is particularly valuable in travel, where long booking windows and high basket values can amplify risk.
Selling travel internationally introduces additional complexity around local acquiring, currencies, taxation and regulatory compliance.
Merchant of Record providers frequently offer established infrastructure across multiple jurisdictions, allowing businesses to enter new markets more efficiently and with reduced operational overhead.
Specialist travel payment providers often maintain relationships with multiple acquirers and card schemes. Intelligent transaction routing and local acquiring capabilities can improve acceptance rates and reduce failed transactions.
Even a modest improvement in authorization rates can have a meaningful impact on revenue.
Managing fraud prevention, scheme compliance, reconciliation, dispute handling and reporting internally requires significant resources.
Outsourcing these functions can free internal teams to focus on customer experience, product development and business growth.
Travel remains a highly specialised sector from a payments perspective. Providers with deep travel expertise understand long booking windows, high average basket values, seasonality, refund cycles and supplier complexity in a way that many generalist providers do not.
For many businesses, a Merchant of Record solution is therefore not simply a payments decision. It is a strategic risk management decision.
Even with robust controls in place, some level of chargeback exposure is unavoidable.
This is why many travel businesses are increasingly incorporating chargeback insurance into their wider financial risk strategy.
Chargeback insurance is designed to protect merchants against eligible losses arising from disputed transactions.
Policy structures differ considerably, but cover may include losses arising from:
For businesses operating with high transaction values and extended fulfilment periods, insurance can provide valuable financial certainty.
Insurance can also help businesses protect cash flow and reduce balance sheet volatility during periods of disruption.
Importantly, insurance should not be viewed as a substitute for effective risk management.
The most resilient travel businesses adopt a layered approach that combines prevention, mitigation and protection.
Fraud prevention technology, Merchant of Record solutions, specialist travel acquiring, operational best practice and insurance each play an important role within that framework.
While chargebacks cannot be eliminated entirely, they can be significantly reduced.
A surprising number of disputes occur because customers simply do not recognise the name appearing on their card statement.
Descriptors should clearly reflect the trading brand customers know and include contact information wherever possible.
Modern fraud prevention extends far beyond simple AVS checks.
Behavioral analytics, device fingerprinting, machine learning, velocity checks and risk-based authentication can all help identify suspicious transactions before they become costly disputes.
Terms and conditions should be clearly presented during the booking process.
Customers should understand exactly what is refundable, under what circumstances and within what timescales.
Travel merchants should retain:
Comprehensive evidence dramatically improves dispute defense outcomes.
Customers who cannot easily contact a business are significantly more likely to approach their bank.
Accessible customer support and proactive communication remain among the most effective chargeback prevention tools available.
Service providers such as Ethoca and Verifi offer tools that enable merchants to identify and resolve disputes before they formally become chargebacks, reducing both costs and chargeback ratios.
Payments infrastructure should evolve alongside the business.
A solution that worked when processing domestic transactions may no longer be appropriate once a company begins selling internationally, expanding distribution channels or increasing transaction volumes.
Regular strategic reviews are essential.
Chargebacks are no longer simply an operational inconvenience.
For travel businesses, they represent a material financial, commercial and strategic risk capable of affecting profitability, cash flow, customer relationships and long-term growth.
The organisations best positioned for future success will be those that treat payments as a strategic function rather than a transactional necessity.
This means combining robust fraud prevention, transparent customer communication, specialist travel payments expertise, financial protection mechanisms and, where appropriate, Merchant of Record solutions.
In an increasingly complex payments landscape, reducing risk is not simply about protecting revenue. It is about building a more resilient travel business.
This article was written by Will Plummer, CEO of Repayd and Group CEO of Trust My Group, a global specialist in travel payments, financial protection and risk management. With extensive experience supporting travel businesses worldwide, Will works closely with tour operators, OTAs, travel technology providers and accommodation businesses to help them navigate the complexities of payments, compliance and risk.
Repayd is The Travel Merchant Account, purpose-built for the travel industry. Combining specialist travel expertise with advanced payment solutions, Repayd helps travel businesses reduce risk, optimise costs and scale internationally with confidence through global merchant accounts, cross-border payments and integrated risk management solutions.
Want to accept payments from clients around the world without the risk or the red tape? Let’s talk about a merchant account that works the way your travel business does.
