Hotels & Credit Cards
Hotels and credit cards have had a long time to get used to each other, it’s long been used as a method of guarantee for the hotel as well as payment. The poor old cheque book and mailing money in the post is gone.
Hotels used to store credit card numbers with the booking on a piece of paper, I say “used” to because a large number still do this! please read up on the fines you will get if your are caught breaking PCI Compliance and there is a breach.\
What’s the problem with Credit Cards then?
They are great when it all goes well, if not then it can cost you a lot of money, here are a few examples:
1. Blocked Cards or Insufficient Funds
This is by far the most common problem hotels face, typically the card is blocked, out of date or they mistyped the expiry date on the booking form. If the hotel is not careful this is the same as having a booking with no guarantee. Not good for that no show!
2. Stolen Cards which are Valid
This is a huge issue in popular destinations and cities, these cards look legit because they are and have real money inside, the problem is they are stolen and once the person finds out you will lose all this money to a chargeback later.
No shows or Late Cancellations
Hotels HATE the no-shows, yes sometimes you can get the money from the card and you don’t have to clean the room but it’s really is not all roses! No-shows can cost you a lot of money if you have not checked the credit cards in advance with a pre-authorisation. You will find that 90% of no-shows also have cards that don’t work.. Isn’t that odd???
Chargebacks
This is where out of the blue you get a call from the bank that they are taking hundreds or thousands from your account until you sort out the chargeback. If it’s a fraud case then you are 99.9% guaranteed to lose it. Unless the guest paid with chip and pin or 3D Secure.
Once a fraudster has gotten away with it once in your hotel they will tell their friends and business will be booming! until that call comes… I have heard £20,000 chargebacks sometimes.
So how can you fight these 2 pressing issues?
Now we’re getting there! You know the problem and now you want a simple solution! Well it’s not that simple.
It’s simpler if you have a modern system like ours for sure but if not then it’s totally possible with more manual work.
How to not lose money to no shows and late cancellations
This is by far the most common and also a major revenue loser, we have some simple tricks to fight this:
- Cancellation policy — You can change your policy so that all bookings must pay in advance for 1 or more nights. This may cost you some business but less stress from the no shows! (But be careful this can make for more chargeback risk)
- Pre-authorise the card — This means you can hold the funds of the card for 7 days, so if you pre-autorise 6 days before you have a few days to fix the issue and resell the room if possible. Not perfect but the only way if you don’t want to charge in advance.
- Mix of both — You can sell both flexible and non-refundable and have a mixed approach.
What if I have 70 bedrooms I heard you say?
Surely I cant pre-authorise up to 50 bookings per day, think of the paper!!!
Yes, if your doing it manually you have to do this, it’s a total pain and takes an hour a day minimum maybe 2 hours if you have to create and send emails and phone calls to chase the guests.
Some hotels don’t get easy access to all the credit cards and need to login to booking.com to see the CVC number, 3+ hours a day now….
(Did you know booking.com delete the numbers after 10 days, so I hope your storing it somewhere safe!)
What is the simple way?
Our reaction system has a very simple rule, we just set it to automatically pre-authorise the guest card 6 days prior to arrival. Simple!
We can connect online payment gateways and get the full card details from the channels, now your PCI scope is reduced by 90%!
But what if it fails?
Then we make another rule! If it fails we send ourself an email with the details.
OR
Send the guest an email to notify them that their card in not authorised and to contact the hotel
We can even also send a payment link so the guest can just pay the amount online on their mobile or desktop!
Think of the hours saved with such a simple thing.
Ok fine we can fix some manual labour, what about chargebacks?
This happens when you charge cards without the cardholder present, this would typically be those non-refundable bookings.
Some hotels ask to see the card details on arrival but even this can be faked.
How to fix:
All you need to do not take the payment, you need to ask them to pay you via a secure method online that has 3d Secure.
3d Secure means that fraud liability is passed over to the bank, great stuff!
More manual work? Send each guest an email with a link to payment??
Yes if you have one of those clunky old systems!
If you use a modern solution like ours it’s just another simple automation that any non-refundable booking you cansend them an email with a payment link automatically and also with some follow ups if they ignored it.
Ok perfect so thats it, just hours of manual work and saved revenue?
Not quite! Remember that PCI Compliance is getting harder each year, if you are non compliant you will see nearly 1% added to your processing fees. That can add up to a lot of money!
Also think of how your business would look if you had insecure servers lying around with thousands of card details, or you have been printing them off and your manager just dumped them in the bin without shredding. These scenarios happen often and if caught you are looking at big fines from the banks and also now possibly a very hefty GDPR fine as you are dealing with a guests personal details also.
Did I get you all scared?
Don’t worry, it can all be fixed. Just sunset that old PMS that sits on your dusty floor at the back of reception and pick one of the modern flavours around that makes PCI compliance simple. This can save hours of staff time, increase productivity and guest satisfaction and that’s just in reference to payments.
Think of the other possibilities you can now have with a modern system… but thats for another day.
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