Online credit card processing capability is essential in a world where most guests want to book online.
People who book online are all about convenience – and that includes having access to a simple, user-friendly and secure payment process. In fact, convenient payment processing is top of mind for travellers who book online regularly. You need to make sure that you’re catering to their preferences to maximise your reservations.
Common pain points for hotel guests can revolve around online payments, and tighter regulation is only going to make it tougher for property owners to overcome these, unless you have the right payment processing solution in place.
Lucky for you, everything you need to know about online credit card and payment processing at your property is right here on this page.
Accepting online payments is all a part of accepting online bookings. It’s important that property owners keep up with the changes in the hotel payments industry, because knowing how guests prefer to pay for their rooms is vital for maximising bookings at your property.
A key aspect of operating a small hotel is developing an online presence that allows you to attract guests. In light of this, it’s critical that you offer your guests an opportunity to book with you directly on your website. But how do you get paid?
Let’s start with the basics of online payment processing. In general, there are four parties involved in any credit card transaction:
Online credit card transactions are typically processed in a matter of seconds. Here is what happens:
Special circumstances for hotels
As a member of the hospitality industry, many of your online transactions are considered “high risk” because you regularly conduct:
If you’re a property owner in Europe, there’s something else you have to consider when it comes to online payment processing. Strong Customer Authentication (SCA) is a set of regulatory requirements that will take effect on 14 September 2019, designed to make paying online more secure and, consequently, reduce payment fraud.
SCA adds an extra layer of security when customers make a payment online, and this means EU-based property owners need to take steps to be compliant, or you risk not being able to receive online payments.
Haven’t heard of SCA? Or don’t have a plan in place to become SCA compliant yet? Click here to find out everything you need to know about SCA and what it means for your property.
Are you processing bookings and payments via offline methods? You’re missing out on a whole world of opportunity. Consumers are increasingly willing and able to shop for nearly any product or service online – including hotel rooms. They trust this medium and prefer the convenience online shopping affords them.
Naturally, this means that they are also more willing to provide their credit card or payment information online. This level of consumer comfort and confidence has led to a direct increase in online bookings for hotels across the globe, via direct websites and online travel agencies (OTAs) like Booking.com.
You might be thinking, “Why should I change from my current offline system? My payment terminals already work.”
Here’s a glimpse of what your hotel looks like with and without online payment processing:
Without online payment processing…
When taking the payment, you begin the process by requesting the credit card information from your front desk, and then you are sent an access code. You have to log into your email address to retrieve it.
Once you have the access code, you can view the details of your guest’s credit card. At this point, you are able to process the payment using your payment gateway or physical card terminal. Once the payment has been processed, you must record it yourself in your front desk management system.
And that’s not all. When your guest checks out, any remaining balance to be paid has to be processed through the same set of steps – all over again!
With online payment processing…
You begin the process by logging into your property management system to process the payment.
Also, since credit card details are already stored securely in your front desk system, all you need to do is choose the card you have on file and process the remaining balance when your guests check out.
Your PMS has an integrated payments solution, or is fully integrated with a payment gateway, which automatically records it into your front desk.
Still not convinced? Then let’s delve into three good reasons to make the transition:
The reality is that the lower headline percentage processing rate you pay for your current POS terminal is not the full picture. Your current terminal is, in fact, more expensive than using an online solution because of the hidden costs. It is important not to just focus on the processing cost represented by that headline figure.
The higher percentage for an online system also includes fees for new services that are crucial in saving you money in the long term such as card data storage. So consider what the total cost of ownership really is.
If you are still stapling receipts at reception then that means the manual consolidation of these accounts in your back office is ripe for change and huge cost savings can be made. Although there is plenty of money to be saved, it is important to remember that these savings are not as direct and tangible as those eye catching processing commission rates, which entice you to make like-for-like comparisons.
Now that we’ve (hopefully) convinced you on the why, let’s look at the how of processing online payments at your property.
Online payment processing software – more commonly known as an online payment system or online payment gateway – are third party services that process card payments on behalf of your hotel. They will usually take a small percentage of each reservation for the use of their service. Examples include: Stripe, PayPal Express Checkout, PayPal Payflow Pro and Payment Express.
But while your standard online payment system or gateway might be sufficient for some small businesses, property owners have a unique set of challenges, and using a third party solution can only do so much.
You need a way to make the online transactions import straight to your front desk to truly be effective. That’s where an integrated payment system comes in – a tool that allows transactions from credit/debit cards or mobile payments to be processed directly within your property management system (PMS). This means there is no need to swipe cards or manually enter transaction details into a terminal. Payments can be processed at the click of a button with the details securely saved in your PMS.
We are at a point now where businesses that aren’t implementing the latest technology are at a distinct competitive disadvantage. One such area is payment processing.
To automate your B&B’s payment processing system and provide guests and staff with a hassle-free way of making payments, you need an integrated payments solution.
Offering guests a payments solution that allows for smoother checkouts and frees up staff resources is one of the most important new standards for your property. An integrated payments solution is a critical business tool that will streamline transaction processes at your property.
The biggest benefits of an integrated payment solution (meaning one that is built in to your PMS) at your small hotel are:
A merchant account is an account that allows businesses to accept credit or debit card payments. If you do decide to go the merchant account route over an online payment system, there are a few things you need to know.
Most merchant account providers will include basic services that are necessary for accepting and processing secure credit card payments online. To get started, you’ll need a merchant account provider to connect your guests’ accounts with the business account for your small hotel.
Plus, you need to find a merchant account provider that offers the following:
Regardless of which merchant account provider you select for your small hotel, you will have to pay several types of fees. These can include:
Your fees may be influenced by:
As you can see, setting up a merchant bank account is a time consuming and expensive process. A huge benefit of integrated payment solutions is that they help small businesses avoid the headaches of setting up and maintaining a merchant bank account. Instead, they offer hotels the ability to be set up and start accepting payments in mere minutes with much more transparent, transaction-based pricing.
Now we’ll look at the other online payment processing option that we touched on earlier: online payment gateways.
You can implement an online payment gateway in order to accept credit card payments on your website – but like merchant accounts, it won’t come for free. There are three costs you need to consider when setting up an online payment gateway:
There are several premier online payment gateway providers available, such as Stripe, each with their own fee structure, so costs will vary. This is a worthwhile investment, but an integrated payments solution is a superior – and cheaper – option.
This is because it allows for payment transactions from credit/debit card or other electronic payments (such as internet or mobile) to be processed directly within your PMS when a sale is made. It does away with the need to swipe cards or manually enter payment transaction details into a clunky terminal by allowing you to process payments with a click of the button, using the card details saved securely within the PMS. This saves valuable time, reduces labour costs, and eliminates the possibility of human error.
If your property is interested in an in-built online payment system, Little Hotelier is an all-in-one business solution designed specifically for B&B owners and small hotel operators. Our unique PMS includes an integrated payments solution called Little Hotelier Pay, that allows you to safely and securely accept online payments from your guests via your website and other booking portals.
With a system like Little Hotelier Pay, you will only be charged a small percentage of each transaction. No setup fees or ongoing monthly, refund, support, or cancellation fees are in place.
Investing in the right technology for your property can help improve the efficiency of your business operations. Little Hotelier allows you to simplify the payment process, making life much easier for you and your guests.
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