How to Process Advance Resort Deposits on Credit Cards

The Advance Resort Deposit service enables resorts, hotels, as well as travel agents and other businesses to accept bank card deposits from customers wishing to make a reservation at a particular location.

The service requires that participating businesses follow specific procedures when taking customer deposits, which I will review in this article.

How to Use Advance Resort Deposit

If your business participates in the Advance Resort Deposit service, each card transaction should be processed in the following manner:

1. When a customer contacts you wishing to make a reservation, you will first need to explain the terms and conditions of your reservation, cancellation, and refund policies.
2. Take your customer’s name, card account number, expiration date, and billing address and confirm the room’s rate and location.
3. Request an authorization approval if the payment amount exceeds $50. Standard authorization procedures should be followed. If your authorization request is declined, do not complete the transaction, but request an alternative payment form from your customer.
4. Complete a sales ticket that includes your customer’s name, card account number, expiration date and reservation confirmation number. Write the words “advance deposit” in the cardholder signature field on the sales ticket. If your refund policy features any special terms and conditions, list them on the sales ticket.
5. Provide your customer with a letter of confirmation, a copy of the sales ticket, including the reservation confirmation number, and information about your cancellation and refund policy. This information should be either mailed or emailed (which is typically the case) to your consumer.
6. Deposit the sales ticket for the advance deposit as you would do with regular payments. There are no special deposit requirements to be concerned with.
7. If your customer cancels the reservation in accordance with your cancellation policy, you must honor the request and issue a credit to the applicable card account. The following procedures should be followed:
   1. Prepare a credit slip for the amount of the initially submitted advance deposit and write the words “deposit cancellation” in the cardholder signature field on the credit slip.
   2. Prepare a notice of cancellation and issue a cancellation number.
   3. Provide a copy of the credit slip and notice of cancellation to your customer (it can be mailed or emailed).
   4. Record the cancellation number on the slip and deposit the credit slip as you would usually do it.
8. If you have followed the above procedures and the transaction still results in a dispute, your processing bank will bear the liability, even if the card account number used to make the deposit is fictitious or unidentifiable.

The Takeaway

The biggest reason resorts, hotels and travel agencies are classified as high risk merchants by Visa and MasterCard is that they tend to generate a rate of customer disputes and chargebacks that is much higher than the average. The vast majority of them are a direct result of improperly handled cancellation requests or poorly communicated cancellation and refund policies.

If you want to keep your merchant account in good standing, you should process your customers’ advance deposits as described above and keep your cancellation and refund policies as simple as you can. Make your policies easily accessible on your website and have your customers accept them before completing an advance deposit.

You need to accept the fact that cancellations are part of doing business. Making it difficult for your customers to cancel reservations will not only annoy and inconvenience them, but will also result in bad publicity, not to mention that the inevitable disputes and chargebacks may eventually lead to the closure of your merchant account. There is no need to come to that.

Image credit: Wikimedia Commons.