As hoteliers continue to seek out ways to increase physical distancing so as to avoid viral spread, one common interaction where we must all look for solutions is in-person payments. Paper-based cash and coins are falling out of favor while at the same time hotel guests are encouraged to complete transactions remotely via the phone or web-based portals.
However, these latter two, card-not-present methods can be quite compromising to one’s credit card security. Now that it’s the start of summer and operations are ramping back up after the stay-at-home lull, it’s imperative that all hotel properties and brands implement the necessary updates to ensure that these remote transactional channels are as secure as possible, lest hotels be vulnerable to chargebacks.
In these oft-nauseating disputes, the merchant (which is us) is not likely to be favored by the credit card companies, meaning that it’s both a drain on your time as well as your coffers.
Working as an asset manager for an independent property, there were numerous times when I had to sit down with the accounting office to review invoice discrepancies and all the other nuisances that can jumble the recording of revenues or expenses. Dealing with chargebacks or fraud cases was always a major pain point that came to impact nearly every outlet where credit cards were accepted.
Not only does someone on the accounting team lose a ton of time in locating the records of the transaction but the property also incurs an agonizing ‘retrieval request fee’. Most of these disputes arise from card-not-present transactions where there’s always a degree of doubt in the hotel’s case and, given the present circumstances, it’s important we double-down on card-not-present security measures.
In today’s security-everywhere environment with pin codes, CCV (card code verification), AVS (address verification service) and other fraud prevention measures, you would think chargebacks would already be a thing of the past. The problem is that most card-not-present transactions still require some form of paper authorization form or manual posting to the correct ledger within the PMS, thereby breaking the chain of evidence that’s all electronically collected.
To gather some more perspective on the issue, I reached out to Saar Fabrikant, CEO of b4, a hospitality tech provider specializing in automated credit card payment solutions, where he said, “Chargebacks have become a problem we tolerate as the cost of doing business. Whether it’s a guest folio, a group master, spa, golf, restaurant or any other merchant terminal, taken together this is a ton of work for accounting to handle. What a hotel really needs is a PCI-compliant payment portal akin to something like PayPal but without the need for a separate accounting ledger.”
Indeed, there are now digital platforms that can replace the paper-based verification of transactions while also passing information right into the proper PMS ledger. I’ve seen these in action and all that’s really required from the hotel is the customer’s email address to then send a private hyperlink that contains a payment form.
For these types of processes, the reservationist, front desk agent or any other hotel employee never sees or hears the guest’s credit card information; it’s all done online. Meanwhile, the accounting office is saving time in having to post all these transactions, especially when you are dealing with complex situations like those that require recurrent installments from multiple payees for a big event.
This is what has really inspired me to write about this lingering pain point in the first place. Enhancing electronic payments not only means winning far more credit card disputes – that is, reduced chargeback costs – but also less time needed to post the myriad of countless authorization forms, along with the aforementioned physical distancing advantage.
Then at the small hotel level, the top benefit comes from seeing your controller smile because posting and aligning the various ledgers at the end of each month is a monotonous task that these hoteliers no longer have to worry about, allowing them to focus on more important issues.
Of course, once you get to larger properties, the number of merchant terminals multiplies threefold to fivefold because of all the in-house amenities. With each outlet comes the possibility of chargebacks, making that task a horror show to manage, especially in lean times such as now when you need to be hyper-efficient with your labor. For just about any property, the advantages are clear, making this one big project you should seriously consider resolving while we are all toiling through Covid.
One of the world’s most published writers in hospitality, Larry Mogelonsky is the principal of Hotel Mogel Consulting Limited, a Toronto-based consulting practice. His experience encompasses hotel properties around the world, both branded and independent, and ranging from luxury and boutique to select-service. Larry is also on several boards for companies focused on hotel technology. His work includes five books, “Are You an Ostrich or a Llama?” (2012), “Llamas Rule” (2013), “Hotel Llama” (2015), “The Llama is Inn” (2017) and “The Hotel Mogel” (2018). You can reach Larry at [email protected] to discuss hotel business challenges or to book speaking.
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