Credit Card Processing Best Practices for Hotels

Credit card processing at hotels, motels and other lodging establishments is done under some very peculiar circumstances that need to be accounted. Owners and operators of hotels need to be closely acquainted with these circumstances and be able to implement the rules that govern them into their payment acceptance processes.

My goal in this article is to explain what these unique circumstances are and to offer a set of best payment processing practices you will need to incorporate into your own process:

1. First of all, if a customer has prolonged his stay or if any additional fees need to be added to the original amount, you will have to get an authorization approval for the difference from the card issuer. If you fail to do that, the whole transaction amount can be charged back to you. But remember that you have already obtained an initial authorization approval, so you only need one for the additional amount. Following are the rules on how to do that:
   
   1. Just as all other transactions, you need to follow your standard transaction authorization process when requesting an approval for the additional amount.
   2. If the authorization request for the additional amount is rejected, do not send the amount for settlement. Instead, contact the customer and ask that he provides an alternative form of payment for the additional amount.
2. You should solely deposit for settlement the originally authorized amount. If the authorization request for the additional amount was declined, you need to:
   1. Settle the amount that was previously authorized and leave aside any amount for which authorization was rejected.
   2. Promptly contact your customer and ask for an alternative form of payment for the amount for which authorization was not received.
3. Request an authorization reversal whenever the initially authorized amount is greater than the total cost of the hotel stay. Instead, you will have to issue an authorization reversal for the difference.
4. Use the final authorization and the fifteen percent rules. When your customer checks out, authorization approval is needed in the following instances:
   
   1. There is no original authorization. There is no need to elaborate on this requirement.
   2. There is an initial authorization, but the eventual amount is greater. In such cases you need to use the 15 percent rule to estimate whether or not an additional authorization approval is needed. Here is how to do this:
      
      1. Add 15 percent to the already authorized amount.
      2. Compare the total you received to the actual amount of the stay.
      3. When the final transaction amount is greater than the total calculated as previously shown, issue an authorization approval for the difference.
5. Obtain customer acceptance of your terms and conditions. Inform your customers what your terms and conditions are before they make a reservation. In particular, you have to disclose these details:
   1. Your cancellation policy.
   2. Your policy on "no-show" charges and whether or not they will be added to the total amount or billed separately. and when they will be applied.
   3. The way your hotel's name will be displayed on your customer's monthly card statement.