How to Avoid Chargebacks and Credit Card Charge Disputes

Chargebacks are an all-too-common headache in the restaurant industry. Whether caused by billing confusion, fraud, or service disputes, they cost restaurant operators a significant amount of time, money, and trust with payment processors. For hospitality venues operating on thin margins, every chargeback hits hard.

That’s why having the right technology—like a modern restaurant POS system, handheld POS devices, and mobile ordering and payment tools—can be your best defense. At GoTab, we’ve built an entertainment commerce platform that not only streamlines service and saves on labor, but also actively protects your business from chargeback losses.

Here’s how to reduce chargebacks and protect your revenue using smarter restaurant technology.

Why Do Chargebacks Happen in Hospitality?

To prevent chargebacks, it helps to understand why they happen. Common causes include:

• Unrecognized charges (guests don’t remember ordering or see a charge on their credit card statement that they don’t recognize)
  
  
• Disputes over service or food quality
  
  
• Intentional fraud or "friendly fraud" (card used without the guest’s permission)

Traditional POS systems often lack the transparency and tracking needed to defend against these disputes. That’s where modern tools like GoTab shine.

Use Mobile Ordering and Digital Receipts to Boost Transparency

With mobile ordering and payment, guests submit payment before they place an order. They can also view, manage, and pay for subsequent orders directly from their own devices. Depending on the operator’s preference, GoTab can send an SMS link to the guest’s tab the moment it’s opened, giving them full visibility into every item they order.

This real-time access eliminates billing confusion and helps ensure guests know exactly what they’re paying for. Digital receipts are automatically sent, and guests can close out on their own—no surprises, no misunderstandings.

Prevent Walkouts with Insufficient Funds Protection

One of the top causes of revenue loss in restaurants is abandoned tabs or guests walking out without paying. GoTab’s Insufficient Funds Protection helps eliminate this risk.

When a tab is opened through the GoTab mobile ordering, restaurant POS or handheld POS, the system pre-authorizes the guest’s card to ensure funds are available. If the guest forgets to close their tab, GoTab can automatically do it—ensuring you get paid.

This feature is especially valuable for high-volume venues and eatertainment concepts, where keeping track of every guest manually isn’t always feasible.

Collect Guest Contact Info to Help Fight Disputes

With GoTab, transactions typically include verified contact information—a mobile number—used to send the guest their tab. This becomes critical in the event of a chargeback, as it provides a digital paper trail that includes:

• Who placed the order
• When it was placed
• What was ordered
• The communication sent to the guest

This information, gathered automatically via mobile ordering, strengthens your ability to defend against fraudulent disputes.

Flag Suspicious Transactions & Let GoTab Handle Disputes

GoTab goes beyond just helping you process payments. If an operator suspects a charge that needs to be disputed, they can flag the transaction to their customer success manager. From there:

• GoTab collects order data, timestamps, and payment history
• We execute automated processes to notify payment processors and dispute the chargeback
• The entire process happens behind the scenes, so you can spend your time on more important tasks

Unlike traditional POS providers, GoTab actively works to protect operators in the event of a dispute—an important distinction that helps you hold onto your hard-earned revenue.

Empower Your Team with Handheld POS Tools

GoTab’s handheld POS—Pocket or Phone Only POS—equips your staff with tools to reduce chargebacks in real time. Team members can:

• Show guests their active tab on the spot and share it with them via QR code or SMS
• Split checks or close out payments tableside
• Instantly send receipts or SMS confirmations

When servers can address questions quickly and transparently, guests are less likely to dispute a charge later.

‍Technology That Reduces Risk and Supports Growth

In the end, avoiding chargebacks is about more than just battling disputes—it’s about running a smarter, more transparent operation. With GoTab’s unified platform—featuring restaurant POS, handheld POS devices, mobile ordering and payment and Manager app—you can serve guests better and protect your business in the process.

From Insufficient Funds Protection to automated chargeback handling, GoTab gives hospitality operators peace of mind in today’s fast-paced environment.

Want to learn more about how GoTab reduces chargebacks? Schedule a demo to explore our full suite of tools.

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