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The Ultimate Hotel Payment Processing Guide

Hotel payment processing is the process by which hotels capture and process credit card information from guests. By now, you've probably invested a lot of time into optimizing your payment process for room bookings – but modernizing all aspects of your business is important. From this guide, you'll learn ways to optimize your hotel payment processing workflow and reduce processing costs.

What's Covered
  • How the processing system works
  • Ways you may be misusing the system, resulting in unnecessary costs
  • Ways to reduce processing fees (and even chargebacks)
  • Buying considerations to keep in mind


Part One: Hotel Payment Processing 101

The Parties Involved

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

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

How It Works

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.

What are the different methods to process payments?

Guests need to provide credit card information and make payments before arriving at the hotel. For these scenarios, a hotel should acquire a proper online payment processing (ecommerce) solution. This allows hotels to capture payment information in a secure, less expensive manner when the guest is not present to swipe, tap, or chip their card.

Here, guests are able to swipe, tap, or chip their cards for payment.

Point-of-sale (POS) systems are more advanced than terminals, offering additional functionality, such as the ability to calculate sales tax and discounts and accessing and managing inventory.

Some businesses use virtual credit cards for corporate travel expenses, so it's becoming more commonplace for hotels to accept payments made with virtual credit card numbers.​

Mobile payment solutions like Apple Pay, Google Wallet, and Samsung Pay have become increasingly popular. Hotels can integrate with these digital wallets to allow guests to make payments using their smartphones.

Part Two: Ways to Reduce Processing Costs


Process Card-Not-Present Transactions Correctly

Credit card fees are determined by card type, merchant category code, and processing method (which determines the compliance level):

Why are Merchant Category Codes (MCC)s important?

While an MCC seems like a simple label, it’s far more complex. For example, Visa has roughly 750 unique MCCs. There are several reasons for so many unique codes, but we'll highlight the two that are associated with processing fees.

Risk and Pricing: Card issuers manage fraud and chargeback risk with their processing fees. Hotel and restaurant transactions are near the highest because of the potential for customer disputes for both fraudulent and legitimate transactions.

Processing Method: MCCs are assigned for businesses primarily accepting chip-enabled transactions, but merchants get downgraded (charged higher processing fees) when they key-enter a transaction.

Downgrades are charged by the card issuer – sometimes up to 5% per transaction.

For smaller charges like post-stay shipping charges, this may not seem like a big risk, but for events that cost thousands of dollars, it can cost you a lot.

Why shouldn't you key-enter cards at the front desk?

Oftentimes, hotel staff bypass manually key-enter payment information at the front desk. This typically occurs when payment information is collected over email, phone, or fax instead of an appropriate ecommerce solution, and staff have no other means to process it.

Unfortunately, their workaround:

  • Unnecessarily increases your processing fee.
  • Results in higher declines, keeping you from getting paid.
  • Leaves you in a weak chargeback defense position.

With an ecommerce solution, you can:
  • Securely capture and process credit card information in real-time, and store it for future billing.
  • Enable 3-D Secure (3DS) to authenticate the cardholder and pass chargeback liability to the card issuer.
  • Tie the payment to a signature document, further evidence the transaction is legitimate in a chargeback dispute.


Offer ACH: A Card Alternative

ACH is good for business – even if you're already using wire instructions. They're just as convenient and secure as card payments but cost significantly less to process. By offloading just 15% of card volume to ACH, customers are saving thousands a month.

Scenario A: Cards and Wire Instructions

Card = Convenient

Guests can enter their card information into a form and securely send it to you.

Wire Instructions = Less Convenient

Guests must follow your manual steps to pay you (and absorb the wire fees).

Results = Higher Card Volume / Higher Fees

Scenario B: Cards and ACH

Card = Convenient

Guests can enter their card information into a form and securely send it to you.

ACH = Also Convenient

Guests can instantly enter their bank information into a form and securely send it to you (and for many, this may be their preferred method to pay you).

Results = Lower Card Volume / Lower Fees
With two easy ways to pay you, you’ll inevitably have guests who opt for ACH over card, especially if you prompt them to. For example, setting ACH as the default payment method in Sertifi and/or requiring ACH for transactions over certain thresholds.


Address Issues Causing Downgrade Fees

A merchant is charged an interchange fee for every card transaction. A downgrade occurs when a transaction is routed to an interchange category that is priced higher than the intended category. When this occurs, the rate applicable to the cost of a transaction is increased and the transaction is considered “downgraded.”

If you’re not careful, downgrade fees can be surcharged on top of your other processing fees – and any transaction can be a risk. According to Elavon, downgrades can cost a merchant .5% or higher in fees a year.

An important clue in determining whether you’re overpaying is by checking your interchange statements. If you're seeing the term "standard," don't be fooled: that's standard for "downgrade." "EIRF," or Electronic Interchange Reimbursement Fee, is another term to look out for.


Part Three: Buying Considerations

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 key factors.

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

✅ Hidden Processing Costs: Are you unknowingly paying extraneous fees for processing?

✅ Fraud Prevention: Do you have a partner and the tools to dispute chargebacks when they occur? Is your provider proactive about helping you detect hotel fraud early and reduce hotel chargebacks?

✅ Payment Flexibility: Does your provider offer multiple payment types, including ACH?

✅ Security and Compliance: Is your provider PCI compliant and staying up to date with newer regulations like 3-D Secure?

✅ 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?

Get paid faster with Sertifi's hotel payment solutions.

Thousands of hotels use Sertifi payments to:

Capture a payment with an e-signature, ensuring payment.

Get paid 90% faster with fewer steps and assured security.

Reduce fees with a proper ecommerce system and flexible options like ACH.

Our customers have saved up to $175k a year in hotel payment processing and event payment processing fees.


“Sertifi allows our sales and catering group to collect signed contracts 96% faster and capture payments within one day. I always have previous employees reaching out to me because they want to add Sertifi.”