Credit Cards offer a Future for Luxury Charter Yacht Payments (Part 2 of 2)

Understanding the Chargeback Process: A Step-by-Step Guide

One of the most misunderstood aspects of credit card payments is how the chargeback process actually works. Currently, many brokers believe that they are required to issue a provisional refund the moment a guest initiates a chargeback (which is terrifying given the large sums involved, and given the fact that the charter company has the funds, not the broker). This is not the case. Here’s what really happens:

1. Charter Issues. Per CYBA Clause 17 (Complaints) - any issues are to be disclosed during a set timeline during the charter. Only if not resolved, then the next steps may occur. 

2. Initiation of Chargeback: A guest who is dissatisfied with a charter may contact their card issuer to dispute the charge. The issuer will then begin the chargeback process by notifying the payment processor (like us) and the broker.

3. Notification and Response Window: The broker is notified of the chargeback and provided with a specific window of time to respond to the claim. During this period, the broker can submit evidence, such as the charter agreement, proof of services rendered, and any relevant communication with the guest.

4. Evaluation by Card Issuer: The card issuer reviews the evidence submitted by the broker. If the arbitration clause is included, it is particularly influential because it shows that both parties agreed to resolve disputes through arbitration before any refunds or chargebacks.

5. Provisional Refund Decision: Only after evaluating the evidence does the card issuer decide whether to issue a provisional refund to the guest. Importantly, this decision is not automatic upon the chargeback initiation. The broker’s response and the evidence provided play a critical role in this decision.

6. Arbitration and Final Resolution: If a chargeback request is made before the arbitration process is concluded, as the payment processor, Yachtly submits the charter agreement highlighting the arbitration clause to the guest's card-issuing bank. This proactive step helps to prevent unwarranted chargebacks and ensures that both parties adhere to the agreed-upon terms. If the arbitration clause is invoked, the dispute must be resolved through arbitration before any final decision on the chargeback is made. This ensures that brokers are not unfairly penalized and that guests cannot bypass agreed-upon dispute resolution methods.

Why Credit Cards are Ultimately the Best Payment Method for Brokers

By accepting credit cards, charter brokers can meet the preferences of their clients, but also streamline their payment processes and reduce risks. Here’s why it makes sense for brokers to offer this payment method:

1. Increased Bookings / Multiple Payees: Charter clients have shown that they are more likely to book with a broker who offers convenient, secure payment options.  Credit cards can make charter  services more attractive to a broader, and increasingly younger clientele.

2. Faster Payments: Credit card payments are processed quickly, reducing the time it takes for funds to be available and ensuring that charter bookings are finalized without delays.

3. Chargeback Protection: With the right legal framework in place using an arbitration clause, the risk of fraudulent chargebacks can be effectively managed. This allows brokers to focus on providing excellent service without the worry of financial loss.

Embracing the Future of Yacht Charter Payments

At Yachtly, we feel that the luxury yacht charter industry is on the cusp of a payments revolution. By understanding the rights and protections available, and by implementing strategic measures like arbitration clauses, charter brokers can confidently offer credit card payments as a safe, convenient, and ultimately superior option for their business. 

If you would like to learn more about modernizing your payments infrastructure, contact us at support@goyachtly.com.