Card Acceptance Best Practices for Hotels

For best results, the following best practices should be implemented into hotels' card acceptance procedures:

• Obtain an incremental authorization approval if the hotel accommodation has been extended or if the customer has incurred incidental charges. In such instance you will need an authorization only for the additional transaction amount that will be generated by the extension or by the incidental charges. You should:
  
  • Follow standard authorization procedures to obtain an approval for the incremental transaction amount.
    
  • If your authorization request is declined, contact your customer and request an alternative payment method for the incremental amount.
    
• Settle only for the approved authorization amount if an incremental authorization was declined. Good settlement practices will help you minimize chargebacks, processing costs and potential losses when card issuers decline incremental authorization requests for hotel extensions and incidental charges. You should:
  
  • Settle only for the approved amount and do not include any amount for which authorization has been declined.
    
  • Request an alternative payment method for the declined incremental amount.
    
• Submit an authorization reversal if the originally authorized amount exceeds the actual hotel accommodation cost. In such cases you will need to submit an authorization reversal for the difference between the authorization amount and the actual hotel reservation agreement.
  
• Apply the final authorization and the 15 percent rule. At checkout, authorization is required when:
  
  • There was no previous authorization. In such cases you should authorize the total amount.
    
  • There was a previous authorization but the actual amount exceeds the previously authorized amount. In such cases you should apply the 15 percent rule to determine whether or not an additional authorization is required. To do this:
    
    • Add 15 percent to the previously authorized amount.
      
    • Compare the total (sum of authorization amount plus 15 percent) to the actual transaction amount.
      
  • The actual transaction amount is more than the total. In such cases an additional authorization is required for the difference between the original authorization and the final transaction amount.
    
• Clearly disclose all terms and conditions of the sale. Your customers should know all terms and conditions before booking a hotel room at your establishment. Always communicate with your customers the following details:
  
  • Your cancellation policy.
    
  • How a "no show" fee will appear on the cardholder's statement (in the total amount or separately).
    
  • When the "no show" fee will be assessed.
    
  • What name will appear on the cardholder's statement.
    
  
  Clearly disclosing the above information will ensure quality of service and help avoid customer inquiries and disputes which, in turn, will minimize chargebacks. For best results you should require that your customers click on an "Accept" or "Agree" button for the disclosure statement displayed on your website. Your merchant processing bank and credit card services provider should be able to help you with devising and implementing these policies.