Debit Memo Working Group Develops Best Practices

Debit Memo Working Group Develops Best Practices

During its fall meeting, ARC's Debit Memo Working Group collaborated on best practices and held a workshop on chargeback prevention.

During its fall meeting on October 18, ARC’s Debit Memo Working Group (DMWG) moved toward finalizing a new set of industry-wide best practices surrounding debit memos and celebrated the progress the group has made in recent years, which includes this month’s addition of standard memo reason codes to Memo Manager.

The DMWG meeting also featured a workshop focused on credit card chargebacks that provided an overview of the credit card payment process and tips for preventing and resolving chargebacks. ARC’s Jennifer Watkins, director of credit card services, and Kevin Haag, manager of credit card services, shared valuable insights on how to prevent fraud in card-not-present transactions.

Finalizing Best Practices

As part of the group’s mission to reduce debit memos, the DMWG has been identifying ways the industry can work together to improve communication and accuracy. This year, the DMWG has focused on creating an industry-wide set of best practices for the debit memo process. These best practices apply to airlines, travel agencies, GDSs and ARC, and they address suggested agency and airline employee training, communication timelines, auto-price tools and suggested guidelines for timely resolution. The best practices will cover the following areas of the debit memo issuance and resolution timeline:

  • Pre- and Post-Debit Memo Communication and Training
  • Auditing and Debit Memo Issuance
  • Debit Memo Research, Communication and Response
  • Debit Memo Settlement

The group is nearing a finalized version of these best practices. The DMWG expects to approve, publish and distribute these best practices by the end of 2017.

Celebrating Progress

In an overview of the current state of debit memos in the air travel industry, Shelly Younger, ARC’s senior manager of industry relationships, shared that, although the total volume of debit memos in the U.S. is projected to increase by 1 percent in 2017, the total dollar value of those memos is projected to decline significantly — by 11.5 percent. IATA gave a debit memo update, as well, reporting similar trends of increased volume and decreased dollar value of debit memos in 2017 (year to date).

Younger shared that, as of this year, there is only one debit memo for every 335 airline tickets settled through ARC. That equates to $1 of debit memo value per every $705 of ticket value settled through ARC. ARC data also shows a decrease in chargeback memos from 2016 to 2017, signifying a positive trend. (Chargeback memos increased by 7% in 2016.)

The DMWG celebrated a debit memo milestone at its meeting, as 2017 marks 10 years since the launch of ARC’s Memo Manager tool. Sarah Sager, manager of product management for ARC, shared updates on Memo Manager, including its recent implementation of standard reason codes (the codes identified and agreed upon by the DMWG) in the tool for 23 airlines.

Next Steps

To close out its meeting, the DMWG turned its focus to 2018 priorities. Breakout groups identified several ideas for initiatives that would reduce debit memo volume. The DMWG will evaluate these as priorities for next year.

The DMWG also plans to finalize its set of best practices and vote to approve them in the coming weeks. The best practices are expected to be published and distributed by the end of the year.

For more on the Debit Memo Working Group and its initiatives in the travel industry, visit the ARC’s Debit Memo Working Group webpage.


About the author

Megan Leader is a senior brand and content strategist for ARC. She writes about air travel data, trends and destinations for readers throughout the travel industry. An avid traveler, Megan loves to explore art, design and food culture in cities around the world.