Virtual Cards: Best Practices for Hotels
The benefits and challenges of virtual cards in hospitality
Friction in the payment process
For as long as people have been exchanging goods and services, there’s been friction in the payment journey.
From bartering, to coins, to paper notes, to credit cards transactions, to online and mobile payments, we’ve constantly been striving to make the payment process easier.
Each advancement has aimed to reduce friction and increase the ease of making payments and conducting business. But progress doesn’t stop and now we’re entering a new age of payment methods – the virtual age.
What is a virtual card payment?
A virtual card is not a physical card but rather a randomly generated 16-digit number that acts as a credit card for a one-time use. Once the virtual card is used for a transaction, the number is never used again. Doing so prevents fraudsters from stealing your credit card information since it’s not being stored anywhere.
Virtual card payments work in the exact same way as credit or debit card payment, but by existing only digitally, they provide a more secure, efficient, and risk-free way to handle transactions.
This is in part due to the parameters you can attach to a virtual card. For each specific use, you can include the date it’s valid for and either a set dollar amount or a range available to spend. Depending on what it’s being used for, other parameters can be included as well.
What are the benefits of virtual card payments?
- Shorter payment cycle
- Seamless process
- More secure
Virtual cards in the hospitality industry
Virtual cards are changing the landscape of payments by providing a new layer of protection to everyone involved in the payment process. Hospitality is one industry that has embraced the use of virtual cards.
This includes hotels, travel management companies, business travelers, and the businesses themselves. With the guest experience being a top priority, hotels are always looking for ways to improve their workflows and create a smooth journey, starting with the payment process.
As fax machines became obsolete, and guests and other third-party booking agencies could no longer complete a transaction with this method, virtual cards were a logical choice to ease the friction.
Flexible payments are key to creating a positive check-in process, and virtual cards are just one option.
The use of virtual card payments comes with an added bonus as well – the capability of contactless check-in. Since a virtual card isn’t a physical object, there’s no risk of someone else touching or handling it and potentially spreading illnesses.
The challenges of virtual cards
While virtual card payments afford hotels with greater data security, utilizing virtual cards can prove challenging for front desk staff. Along with refunds, virtual cards are the number one question Guest Services Agents deals with.
Dealing with questions about virtual cards can often cause issues in day-to-day tasks for Guest Services Agents. Making adjustments to a guest’s reservation and refunding guests are the top support calls for many properties. In addition to being an inconvenience, dealing with these issues takes staff away from more productive activities.
To help overcome these issues, it’s important that your hotel and staff are aware of common questions and concerns and have best practices in place when dealing with virtual payments.
Charging the virtual card
If you’re able to do so, always charge the virtual card for the amount owed up front. And at the bare minimum, you should authorize that card for the amount owed. Additionally, you’ll want to be sure to get a personal card on file from the guest at check-in for incidentals resulting from the stay. Otherwise, you may encounter issues after the guest checks-out.
Always review payment instructions and any notes associated with a reservation that uses a virtual credit card e.g. the rate is suppressed.
When the rate is suppressed on a reservation, the guest will need to go to the third party they booked with to get their original receipt. The front desk staff can print the second folio (incidental folio) for proof of stay but they cannot reveal the room rate in their PMS to the guest.
Why can’t they reveal the room rate?
Take Expedia for example. If someone books their room through Expedia, Expedia will take 15-30% of the room rate at the time of booking. So, while the guest might book a $100 rate, the rate in the PMS is actually $70.
If the rate of $70 was disclosed to the guest, they might think they got swindled leaving them frustrated with the hotel.
Incidentals and authorizations
Many hoteliers face the problem of incidental costs at check-out. The additional charges can’t be added to the virtual card since the amount of money on the card is predetermined meaning the transaction would be declined. In this case, a best practice is to simply charge the guests’ personal card.
Problems arise when the property forgets to authorize a card during, or prior to, the check-in process leading to frustrated and inconvenienced guests. Oftentimes, the online travel agent (OTA) the booking was made through is unable to help, further exacerbating the situation.
This all stems from a crucial step being skipped or forgotten – when the hotel fails to confirm that the virtual card has the correct amount on it to begin with. Most properties authorize at check-in and charge at check-out, but this is a mistake.
With virtual cards, the process is different because there isn’t a physical card present and it can’t be used with the payment terminal. Which, in many cases, is a key part of the authorization process in many PMSs.
Therefore, when it comes time to check the guest out, the card is declined, and the guest has already left the property. Seeing as the majority of guests will never go to the desk to check-out, the hotel is unable to correct charges.
Using virtual cards at your property creates a much easier payment process, a better guest experience, and a more secure way to collect transactions. But it’s important to ensure that your staff understands the ins and outs of virtual cards before implementing them. Not being fully prepared or having the proper understanding can lead to frustration for both the staff, and your guests.
Be sure to download our Virtual Card Guide with tips for everything you need to know when dealing with virtual card payments!