Credit Card Processing Blog

Your hotel’s website should be designed to provide visitors with complete information about your operations, in particular about your policies regarding no-shows, advance deposit rates and cancellations. The more your customers know about your policies before they book a room, the fewer disputes and chargebacks you will have to resolve.

In this post I will review the essential internet reservation disclosures your hotel’s website will have to provide.

Confirmation Information

Your emailed booking confirmation should contain the following information:

• Cardholder name, billing address, phone number, and a truncated card account number.
• Name and physical location of your hotel.
• Accommodation rate, reservation dates and any other necessary reservation details.
• Clearly disclosed cancellation policy and procedures.
• Customer service contact phone number.

You should prominently display a hotel reservation confirmation code in the email to make it easy for your guests to confirm that their reservations were successfully processed. Advise them to keep the confirmation code.

Cancellation Policy Requirements

Your cancellation policy should meet the following requirements:

• Your hotel’s cancellation deadline policy cannot exceed 72 hours before the guest’s arrival date.
• If the reservation is made within 72 hours of the arrival date, the cancellation deadline must not be any earlier than 6:00 p.m. on the arrival date.

Display your cancellation policy on your website and during the reservation process to allow visitors to review it before making a commitment. The cancellation policy cannot be a separate link, but must be:

• On the same screen where the reservation details are shown, or
• Within the same sequence of web pages that the visitor goes through during the checkout process.

Design your website so that the cancellation policy cannot be bypassed at checkout and require your guests to either click on an “Accept” or “Agree” button or type in their initials to accept it. Always issue a cancellation code and advise your guests to keep it.

No-show Policy Requirements

A no-show transaction takes place when a guest fails to cancel or show up to claim his or her hotel reservation. Your no-show policy should meet the following requirements:

• A no-show fee can only be charged after the checkout time on the day following the scheduled arrival day.
• You can only charge one night’s rate, plus tax, if a guest fails to cancel a reservation.

You should always display the words “no-show” within the signature line of the sales receipt or confirmation email provided to your customer.

The Takeaway

As you see, these are fairly straightforward policy requirements and their disclosure on your website should be a routine procedure. It is important that you keep them short and to the point, so that visitors to your website can quickly review the essential information and move on. Long policies are never read in full, which does not work in your favor.

Most importantly, your overarching objective when designing these policies should be to keep your customers satisfied with your service. An unhappy customer is likely to file a dispute, whatever your policy states. A dispute can easily lead to a chargeback, which you should do your best to avoid. Remember that your chargeback-to-transaction ratio must be kept under one percent for any given month, otherwise your merchant account will be suspended.

Learn how to lower your card acceptance cost

Learn how to accept credit and debit cards at the lowest processing costs. The Payment Card Acceptance kit contains a video and an e-book:

• Video – Card Acceptance Best Practices for Lowest Processing Costs (18 min).
• E-Book – Payment Card Acceptance Guide (19 pages).

Hotels and other lodging merchants can participate in the Priority Check-out Service, which provides your guests with the convenience of avoiding delays at peak check-out times. This is an add-on service to your merchant agreement that your payment processor should support. In this article I will offer a cursory overview of its main features.

Priority Check-out Service Addendum and Agreement

Before offering this service, you need to contact your processor and ask to add the Visa Priority Check-out Addendum to your merchant agreement. Once that’s done, you need to use a Priority Check-out Agreement and a sales receipt. The agreement should include the following details:

• Applicable charges posted after check-out. Make sure that your customer understands and agrees to your policy regarding charges posted after check-out.
• A truncated card account number. It is recommended that all but the last four digits of the account number are visible, while the preceding digits should be replaced with fill characters.
• Cardholder signature.
• Cardholder’s mailing address.

How Do You Use the Priority Check-out Service?

Once a guest who has signed the Priority Check-out Agreement has left your hotel, take the following steps:

• Finalize your guest’s bill.
• Complete the sales receipt by entering the total charges incurred during the stay. (i.e., restaurant, telephone, and miscellaneous charges).
• Compare the final bill amount with the initially authorized amount. (See How to Process Credit Card Payments at Hotels for details.)
• Attach the transaction receipt to your guest’s record and make sure it includes:
  • Cardholder name.
  • A truncated card account number.
  • Total charges incurred during the stay.
  • Any delayed charges, if applicable.
  • Authorization number, if necessary.
• Send the following information to your guest (whether it is requested or not) by mail or e-mail within three business days after check-out:
  • A completed sales receipt indicating the final transaction amount with the words “priority check-out” on the signature line, or a printout of the billing document.
  • The itemized hotel bill.
  • A copy of the signed Priority Check-out Agreement.
• Store your copy of the documentation. Keep a copy of the itemized bill and the completed and signed Priority Check-out agreement for at least six months after the transaction date.

The Takeaway

The Priority Check-out Service offers great convenience to both you and your guests. You get to finalize the bill at a time of your choosing, when there is no more pressing work to be done, while your guests do not have to wait in line to be checked out. If you haven’t done it already, contact your processor and request that the Priority Check-out Addendum be added to your merchant agreement.

Learn how to lower your card acceptance cost

Learn how to accept credit and debit cards at the lowest processing costs. The Payment Card Acceptance kit contains a video and an e-book:

• Video – Card Acceptance Best Practices for Lowest Processing Costs (18 min).
• E-Book – Payment Card Acceptance Guide (19 pages).

Prepaid is the fastest-growing non-cash payment method in the U.S. The aggregate number of prepaid transactions grew at a compound annual growth rate (CAGR) of 21.5 percent between 2006 and 2009, while the volume grew at a CAGR of 22.9 percent for the period, according to data from the Federal Reserve. There are substantial differences in the forecasts released by various organizations on the future growth of prepaid, but what they all agree on is that the pace will remain very fast.

With prepaid volumes on the rise, it is important that you are able to recognize prepaid cards and know how to handle them at the checkout. In this post I will review the basics of the prepaid card acceptance process.

Prepaid Card Transaction Basics

There are several different prepaid card types, including gift, rebate, promotion and incentive cards. All of them share some similarities with both debit and credit cards, but they also have some significant differences. Listed below are the basic prepaid card transaction features that you need to understand:

• Card balance. You need to know the card balance to speed up the checkout process. Ask your customer for the exact balance on the prepaid card before processing the transaction. Often, the cardholder will not know the exact balance. If that is the case and you can do a balance inquiry, tell the customer the card balance.

  
  If the customer doesn’t know the balance and you can’t do a balance inquiry, proceed with the transaction. If the balance is sufficient, the transaction will most likely be approved. If it is declined, ask your customer to check the balance with the card issuer.

• Balance inquiry. Most merchants now can process balance inquiries. If you still cannot do that, ask your processor how you can have this capability enabled into your merchant account, so that you can process transactions even when the prepaid card balance is insufficient to cover the whole sales amount.
• Split-tender transactions. If the sale’s amount is greater than the remaining balance on the card, your customer will need to use a second form of payment – cash, check or another card – to cover the difference. This is known as a split-tender transaction.
• Selecting the “Credit” option. Ask your customer to push “Credit” on the keypad and sign the receipt. Although it may say “debit” on the front of the card, prepaid cards typically do not come with a PIN and the sale will be declined if the customer selects “debit” and attempts to enter a PIN.
• Processing credit transactions. If a refund needs to be applied to a prepaid card, the cardholder will need to present it to you, which is why you should advise customers to keep their cards and sales receipts in case they need to return items. Refunds can take three to seven business days to be completed.
• Declined transactions. If a transaction is declined, let your customer know and ask for another payment form.
• Voiding transactions. You can void a sale at the cardholder’s request in the same way as you do with any other payment card transaction.

The Takeaway

If you don’t know how to check a card balance, make a balance inquiry or do any of the other actions listed above, ask your processor for help. You may also need to contact your POS terminal’s vendor and request assistance. Your goal should be to be able to process a prepaid transaction just as smoothly as one involving any other card type and there is absolutely no reason why you shouldn’t be.

Learn how to lower your card acceptance cost

Learn how to accept credit and debit cards at the lowest processing costs. The Payment Card Acceptance kit contains a video and an e-book:

• Video – Card Acceptance Best Practices for Lowest Processing Costs (18 min).
• E-Book – Payment Card Acceptance Guide (19 pages).

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.

Learn how to lower your card acceptance cost

Learn how to accept credit and debit cards at the lowest processing costs. The Payment Card Acceptance kit contains a video and an e-book:

• Video – Card Acceptance Best Practices for Lowest Processing Costs (18 min).
• E-Book – Payment Card Acceptance Guide (19 pages).

In the credit card processing world car rental companies are considered high risk merchants. The reasons are the usual ones: high rates of customer complaints, disputes and chargebacks. More often than not, the causes for customer discontent can be traced to improper payment processing procedures and poor customer service. Both of these can and should be remedied and in this article I will show you how to handle the credit card acceptance part.

Car Rental Credit Card Processing Procedures

Following are the most important aspects of the car rental credit card processing cycle:

1. Obtaining an authorization approval. You need to do that for all transactions, because the car rental floor limit is zero. U.S. merchants should use the $0 Account Number Verification Service if they want to verify that an account is in good standing, instead of a $1 authorization status check.

   
   Each authorization approval is valid for the estimated duration of the car rental period. If the rental period is extended, you will need to obtain an incremental authorization for the expected additional transaction amount.

2. Obtaining an incremental authorization approval. Follow standard authorization procedures to obtain an approval for the incremental amount. If you receive a decline, request that your customer use an alternative form of payment.

   
   If the car rental period extends for longer than two weeks, you need to settle the original transaction and obtain an authorization approval for whatever the estimated balance is.

3. Final authorization and 15% rule. When your customer returns the vehicle, the following authorization procedures should be implemented:
   1. If you had not previously obtained an authorization approval (which you should have done), authorize the total transaction amount.
   2. If an authorization approval was initially obtained, apply the “15% rule” to estimate whether or not an incremental authorization is needed. Here is how to do this:
      1. Add 15% to the original authorization amount.
      2. If the final transaction amount is greater than the sum you received above, an incremental authorization is needed for the difference between the initial authorization amount and the actual transaction amount.
4. Processing an authorization reversal. If the final transaction amount is lower than the initially authorized one, you need to process an authorization reversal for the difference.
5. Billing for additional charges. After a car is returned, you may discover that there are additional charges (for example, gas or mileage, traffic or parking violations, etc.) or calculation errors. You can bill your customer for these charges if your car rental agreement states that you can do it and your customer has agreed to it. Additional charges must be processed within 90 days of the vehicle’s return. Here is how to do it:
   1. Create a separate or amended car rental sales agreement for the additional charges, obtain an authorization for it and deposit it.
   2. Write “Signature on File” on the cardholder signature line, if using a separate agreement.
   3. Mail a copy of the agreement to your customer with a detailed explanation of the additional charges within 90 calendar days of the transaction date.

   
   The additional charges are the ones that are most likely to lead to a customer dispute, even if completely legitimate. You need to document them carefully and be ready to provide all requested documentation to your processor per request. For example, if a customer disputes a charge related to a parking ticket, you will need to produce the following information:

   • A copy of the car rental agreement.
   • Documentation from the authorities that issued the ticket.
   • The rental vehicle tag number.
   • The place, date and time of the violation.
   • The law that was violated.
   • The amount of the fine.

The Takeaway

The payment card industry is not going to change the high risk classification of car rental companies any time soon. However, if you implement the above guidelines in your credit card processing procedures, you will help maintain the good standing of your own company’s merchant account. You will still be getting customer disputes and will have to deal with the occasional chargeback, but it’s a numbers game. Your goal should be not to eliminate these, but to keep them to a minimum that both you and your processor can live with.

Learn how to lower your card acceptance cost

Learn how to accept credit and debit cards at the lowest processing costs. The Payment Card Acceptance kit contains a video and an e-book:

• Video – Card Acceptance Best Practices for Lowest Processing Costs (18 min).
• E-Book – Payment Card Acceptance Guide (19 pages).