How to Manage Credit Card Reservations for Car Rentals

When designing a reservation policy for your car rental company, you need to take into account the high-risk characteristics of the credit card transactions you will be processing.

More specifically, you will need to take into consideration two transaction features:

• Future delivery of the service. Your customers will be reserving cars in advance, often weeks or months ahead of time. In the interim, their plans can change, in which case their reservations may need to be modified or canceled. You will have to be prepared to handle such situations and all cancellation and modification rules and fees must be clearly disclosed to your customers at the time the original booking is made. You should require that your customer accepts these rules by clicking on an “Accept” or “Agree” button under the disclosure statement, before the reservation is complete.
• Incidental and additional charges. Your customer may have forgotten to fill up the gas tank, or the rental period may have been extended. In such cases and if the final transaction amount exceeds the originally authorized amount by 15 percent or more, you must request an incremental authorization approval for the additional amount, before submitting the transaction for settlement. On the other hand, if the originally authorized amount exceeds the final transaction amount, you will have to submit an authorization reversal for the difference.

When designing your website and the information submission form that your customers will need to fill out during the reservation process, consider the following suggestions:

• Require website membership to book car reservations. By requiring that your customers become members of your website, you can collect additional information that can help you assess risk. When setting up member profiles:
  • Verify the provided information before storing it.
  • Implement strong security measures such as secure data storage and limited employee access to protect sensitive information.
• Collect and store reasons for renting cars. During the reservation process on your website, ask customers to provide the reason for renting a car, such as business travel, leisure travel, car repair, or weekend excursion. Store this information in the customer’s history, as well as in the booking record. Rental reasons can help you in the risk assessment process. For example, a rental due to car repair is typically less risky than one due to leisure travel.
• Collect, verify and store customer email addresses. During the reservation booking process, ask customers to provide an email address. These email addresses should be verified before being stored because an invalid email address may be a risk indicator. Send the reservation’s confirmation number (see below) to the provided email address.
• Issue a confirmation number for each reservation. Issuing a confirmation number assures customers that their reservation has been successfully processed. Make sure that your reservation system can support inquiries from customers who may contact you to confirm their bookings, so that your customer service representative can quickly pull up the information by entering the confirmation number.
• Require a waiting period of at least four hours between reservation and pick-up for new customers. You will need this extra time to verify the validity of the cardholder and his or her card before the service begins. This is especially important for new customers with no track record with your company.

Image credit: Wikimedia Commons.