Hotel Payment Processing Series: The Payment Processing System

Over a billion online payments are processed daily, making card transactions the preferred method for booking hotel stays and services. The best online payment experience is seamless, but that doesn’t mean it’s simple. Behind the scenes, a complex system is at work to ensure your guests aren’t inconvenienced and your property gets paid correctly. Creating frictionless online payment experiences doesn’t have to be costly or complicated – and nowadays, switching to a new payment processor doesn’t have to be either.

We’re excited to launch our new hotel payment processing blog series, sharing all the insights and tips you need to evaluate your property’s existing operations and identify opportunities to reduce cost and deliver a better payment experience.

As with any good series, we’re starting at the very beginning: the innerworkings of the payment processing system.

Who is involved with hotel payments?

When it comes to payment transactions, there are a few parties sitting between you and your guests:

1. 1. The issuing bank, who issues credit and physical cards to your guest.
   2. The card network, such as Visa or Amex, who connects the issuers and payment processors.
   3. The payment processor/acquirer, who connects merchants (you) to the card networks.
   4. The payment gateway, on-property technology, including PIN pads and web-based interfaces, needed to connect your property with a payment processor.
      
      

How does the payment system work?

When a card is used, the payment gateway transmits the card information from your point-of-sale (POS) system to the card network and issuing bank involved in the transaction. The POS system is either an on-property pin pad (for card-present transactions) or a web-based interface (for card-not-present online transactions). The processor retrieves funds from the issuing bank account and releases them to your property for a fee, which varies across processors. In exchange for these fees, you receive beneficial services like security and fraud prevention tools.

Oftentimes, a third scenario plays out: hotel staff bypasses a POS system and manually keys-in payment information, e.g., keys-in event deposits and payments into a PMS – but your PMS is designed to accept payment information conveniently and securely from pin pads. Unbeknownst to your staff, their workaround creates expensive, unnecessary costs and leaves you more prone to hotel payment fraud. It’s important to understand the unique use cases, risks, and costs associated with online payments. More to come on this throughout our blog series.

Which key factors should I consider when building my payment system?

Every payment provider charges different fees and offers different services, so it’s important to research and understand your options. Consider the following:

1. 1. Hidden Processing Costs: Are you unknowingly paying extraneous fees for processing?
   2. Fraud Prevention: Is your provider proactive about helping you detect hotel fraud early and reduce hotel chargebacks? Do you have a partner and the tools to dispute chargebacks when they occur?
   3. Integrated Experience: Does your provider offer a combined processor and gateway? Do they integrate with your other systems, such as your PMS, to streamline cost and operations?
   4. Security and Compliance: Is your provider PCI compliant and staying up to date with newer regulations like 3-D Secure?
      
      

Our team’s here to help you and your guests have the best online payment experience possible. In addition to offering SertifiPay, our combined processing and gateway solution powered by Stripe, we partner with trusted payment processors around the globe like Shift4, FreedomPay, and Elavon.

Keep following our payment processing series to continue learning – and in the meantime, let’s stay in touch. Have a complex payment problem you’re trying to tackle? Looking for more information on a certain topic? Not even sure where to start? We’d love to hear from you and help.