One point in particular is being heavily debated: the proposed expansion of the unconditional refund right to all merchant-initiated transactions (MIT).
The German Hotel Association (IHA) highlights in its latest press release that this reform could have far-reaching implications for payment processes in hotels. Since MITs are frequently used for no-shows, minibar charges, or additional services posted after checkout, an unconditional refund right could create significant uncertainty and financial risk.
IHA press release: https://www.hotellerie.de/news/pressemitteilungen
What Does This Mean for Non-Refundable Rates?
The non-refundable rate is a key instrument in the hotel industry: guests receive a lower price, while hotels benefit from greater planning security. This security, however, relies on the fact that the agreed payment is non-refundable — even in the event of a no-show or a last-minute cancellation.
With the proposed PSR regulation, this principle could be undermined:
- If MIT payments can be reversed within eight weeks without justification, non-refundable rates lose their reliability.
- The financial risk would shift back to the hotel — despite clearly defined cancellation terms.
- “Friendly fraud” (e.g., unjustified chargebacks) could become more common.
In short: non-refundable rates could lose value because payments would no longer be guaranteed.
Possible Implications for the Industry
- Liquidity risks due to unexpected chargebacks
- Increased administrative workload to resolve disputed payments
- Uncertainty in pricing and rate strategy, as previously reliable elements weaken
- Adjustments to terms & conditions, payment processes, and prepayment models
Smaller and medium-sized hotels would likely be disproportionately affected, as they rely more heavily on predictable revenue streams.
Why Attention Is Crucial Now
The regulation is not yet final — trilogue negotiations are still ongoing. The IHA therefore urges policymakers to consider the specific role of MIT in the hotel sector and to exclude these transactions from the proposed refund right.
For hoteliers, this means closely monitoring developments and preparing early for potential changes in payment processes.
