Cash was king in the early days of property management systems (PMS) and Point of Sale (POS) solutions. Credit cards, though present, were not the primary mode of transaction, leaving early digital systems without a fully integrated payment processing solution.
This approach differs greatly from today's hospitality landscape, where digital payments and payment methods like credit and debit cards, mobile payments, and contactless payments dominate.
Hoteliers now face a choice: embrace this evolution or risk inefficiencies and unhappy customers. The shift from standalone systems to integrated hotel payment gateways and advanced payment processing software has been transformative, prioritising smooth and secure payment processes to manage all hotel payments better.
This article explores how this transformation can improve staff productivity, enhance the guest experience, and unlock new cash flow opportunities through secure online transactions and integrated payment solutions.
The problems of traditional hotel payment processing
Many hotels still rely on traditional bank terminals to manage payments and extend their property management system. This fragmented payment process, lacking a unified payment processor, leads to inefficiencies in automation, gaps in secure payment processing, and challenges in risk management, compliance, guest trust, and revenue optimisation. It also impacts cash flow and market responsiveness.
The good news? The best payment gateway for hotels can seamlessly integrate with your property management system, addressing these issues with modern payment processing solutions that improve operational efficiency and guest satisfaction. Let's explore the common problems with traditional hotel payments and how an integrated hotel payment gateway can solve them.
1. Wasting time with manual payment processing
Relying on physical or virtual POS terminals for payment processing, including guarantee deposits and cancellation fees, is time-consuming and tedious. Selecting the right payment processor is crucial for businesses looking to accept online transactions securely. For the website booking engine, such approaches struggle to keep pace with online booking demands and separate the moments of receiving the booking and processing the deposit payments due.
Even the payment processing solution for guest-present payments on standalone disconnected terminals requires double entry and is prone to discrepancies in the processed and registered amounts. That leads to significant staff time spent processing payments with a high risk of errors from manual handling.
The solution
Let your property management system and guest-facing apps handle and trigger payment and guarantee requests automatically or, with a click at the right time, send them for payment processing to the terminal or provider. Then, the relevant folio balance is updated automatically. This modern approach saves substantial time and prevents errors. When your property management system is your hotel payment gateway, you can forget about errors in processing payments or discrepancies between processed payments and what's in the guest folio.
2. Missing deposits, cancellation fees and revenue opportunities
Because many existing systems of traditional payment management methods rely on significant manual effort, especially when collecting pending deposits or cancellation fees, revenue loss from delays is common. It's' especially true if your hotel has complicated guarantee policies or requires deposit or cancellation fee collection in time relative to the time of booking — for example, 50% at the time of the booking and 30% three days before arrival. Ensuring the fees are collected means even more manual workload, including further revenue loss from unbooked rooms and uncollected cancellation fees.
The solution
When your hotel solution and integrated payment gateway automatically store (tokenise) guests' credit and debit cards and collect the required deposits, pre-authorisation, and cancellation fees, you secure more hotel revenue. Set payment process rules based on the guarantee policy for each booking and let the hotel solution handle all hotel payments automatically. If a payment fails, the payment gateway hotel solution will inform you and even contact the guest to request new payment methods. Successful payments change the booking status to guaranteed – and the system can even issue and send an invoice if fiscally required in your region.
3. Chasing failed online payments
Failed payments from good and ill-intended guests are common in the hospitality industry. Honest mistakes can cause a card to have insufficient funds or the guest to reach transaction limits. Both cases require hotel staff to contact guests to secure payment, costing valuable time and risking potential revenue loss if not resolved quickly. Chargebacks or stolen card frauds also exploit hotels, falsely inflating booking numbers, leading to unoccupied rooms and lost revenue.
To combat these, OTAs have developed new payment methods, but they only solve this problem for the bookings passing through them, which cost an additional slice of revenue from the high virtual card costs. Can an integrated hotel payment gateway and payment processor help?
The solution
With your property management system as your payment gateway, it can instantly trigger and process payment processing requests and pre-authorisations while updating the payment status. For failed digital transactions, it can send the booker a new payment request. If that fails, you will get another notification, and the solution can cancel the booking and send the free rooms for remarketing automatically – saving hoteliers significant time and remarketing rooms without delay.
4. Worrying guests with risky payment process handling
For phone, email, and business travel bookings, it's still common for hotel staff to ask guests for credit card payment details by file, paper form, or email instead of using secure payment processing software. Even for collecting credit card details as a during-stay guarantee at check-in, many hotels still key in guests' credit card data in insecure data fields of their systems to be able to trigger the collection of the amount they blocked on the standalone terminal.
The practice is risky, and guests don't like it. With recent well-media-covered incidents of substantial credit card data leakage, guests feel uneasy about sharing sensitive data even with reputable hotels. It also impacts compliance rules that ensure credit card data is not leaked or misused.
The solution
When guaranteeing phone or email bookings, send guests a secure online credit card form. Embrace a safe and compliant online check-in solution that collects, tokenises and stores the tokens you need as a during-stay guarantee with the booking. Or use connected terminals that will do the same with the guests checking in traditionally. Your guests will feel secure knowing their data is stored and processed securely according to PCI compliance rules. They will also appreciate the professional treatment by a vendor who cares about their safety.
As an additional bonus, unlike popular payment links that some hoteliers generate from their payment processors, the right hotel solution will let you store and use credit and debit cards throughout the guest journey. No more rekeying the pre-authorisation on the terminal to take a missed minibar charge. Use the tokenised card or the blocked pre-authorisation amount with a single click directly from the booking in the hotel platform or even implement an automated check-out collection without moving a finger.
5. Risking high chargebacks
The risk of card chargeback is higher when you accept online payments without the physical presence of guests, making the choice of a reliable payment processor crucial. This risk includes payments made by guests arriving from online travel agencies (OTAs), the hotel booking engine, or those requested by guests as guarantees for their phone or email bookings on POS terminals.
When hotels don't enforce Strong Customer Authentication, SCA, or simpler 3DS through a hotel payment gateway, the risk of chargebacks increases, threatening revenue and even compliance by making it harder to meet payment processing regulations and data security.
The solution
Your property management system as a payment gateway can automatically request an SCA or 3DS verification on all e-commerce transactions, shifting liability and eliminating chargeback risk. It can even attempt to request it on bookings coming from an OTA – even though you can't collect SCA or 3DS at the time of booking since the OTA collects the details of credit and debit cards, you can enforce SCA during the online check-in request you send to guests and dramatically reduce the chargeback risk.
Smarter payment solutions even allow you to design risk management rules, applying multi-factor analysis based on the payer profile to increase conversions and mitigate risks. When appropriate, you can combine payment processing with enhanced security measures like requesting the booker's ID as proof of transactional validity – especially if you cannot enforce SCA or 3DS, like in the US.
6. Doing complex reconciliation
With payment processing software in multiple systems, there are always reconciliation issues. Accountants know the complexities of ensuring that collected payments match the ones sent for payment processing, those reflected in the accountancy records and that payments sent for processing match those paid out and those held as payment process fees.
It's especially true if the payments are processed on standalone terminals when the amount in the property management system and the amount sent for processing can differ due to manual errors. Or even more when the hotel uses several different payment solutions like terminals at the front desk, a second payment provider for the booking engine, and a third for the online check-in.
The solution
When your hotel solution is your payment gateway, the PMS amounts and those sent for processing will always match. The system can control and trigger all payments. It also provides a stable payment infrastructure and a simplified reconciliation base for all payment-related guest touch points, including website, OTA, online check-in/out, upsells, reservations, and front desk. The hotel payment gateway knows the payout status of every payment, including the payouts made to your bank account and the withheld payment processing fees. Your hotel solution reconciles all payments and payouts and gives you a simple report to validate them.
7. Facing compliance risks
Credit card companies have security compliance standards to protect cardholder safety. However, using paper or unprotected electronic file forms for collecting details or keying in credit card data in unprotected PMS note fields carries significant compliance and reputation risk. Violating the standards puts the card at risk of unauthorised access or fraud – and a violation comes with substantial fines and penalties, not to mention the reputational damage of leaking guest credit card data.
Using non-PCI level secured credit card collection forms or storing credit card details in PMS notes goes against compliance regulations. It means you're taking a significant risk of exposing your business to financial and reputational damage.
The solution
Connect your hotel and payment solution in a single, high-security, and PCI-compliant environment. With tokenisation, your payment process leaves no credit card data in your organisation and reduces the scope of your compliance requirements. You keep your hotel complaint and secure by moving to the cloud, relieved from the data storage and protection risks, guaranteeing your guests' credit card safety, simplifying payment processing and guarantees, and removing credit card processing risks.
8. Struggling to adopt digital guest services
Boosting staff productivity while staff shortage is higher than ever needs digital guest-facing technology and the right payment processing software. Securing delightful guest experiences for modern guests requires a minimum of online check-in and check-out. Boosting revenue needs digital upsell services. The problem is that these services can't fully function without seamlessly integrating payments within the booking journey — for example, a check-in credit card to be used in case of damage or as a guarantee for the minibar.
Using different payment solutions online or even for separate digital services at the front desk disrupts this journey and complicates your reconciliation process. And if you ask guests who checked in online for a new credit card guarantee at the physical check-in, you remove the time-saving the guest desired from checking in with you online in the first place.
The solution
Use the same payment infrastructure throughout the guest journey that's at the heart of your hotel solution. With the guest-facing apps, you can acquire, and with the staff-facing app, you can store (tokenise) and reuse payment methods regardless of guest journey stage or booking channel with smooth reconciliation. No matter what, you can always bill your guests, elevate guest service, embrace new revenue opportunities, and reduce time spent on annoying formalities.
9. Smoother onboarding and daily use
Hoteliers often face friction when they source the full solution from multiple vendors. Problems include compatibility issues between the hotel solution and the payment processor and orchestrating complex technical settings by the hotel and payment solution provider to ensure that the infrastructure operates as expected.
Or they bounce between the support of the two organisations to find out who needs to solve a technical issue in case of a problem…
That often means hoteliers spend hours or even days jumping between the payment and hotel solution providers without the ability to process online payments. Getting the right proposals and agreements, ensuring full compliance, and coordinating synchronised onboarding can be challenging and threaten a go-live.
Additionally, suppose payment methods change their payment processing workflow. In that case, the given payment provider may implement it in a way that is incompatible with how the hotel solution handles payments, so it may lead to disruption in the capacity to process that payment method.
The solution
Embrace the payment gateway solution offered by your hotel solution provider. If your hotel solution provider has taken the responsibility to offer their payment solution, they have focused on ensuring all payment methods operate at all times. They are responsible for troubleshooting and resolving the issue if it doesn't. You will not bounce or serve as a mail pigeon coordinating two or more support organisations. You have a single point of contact and a single partner to agree on your fees, coordinate onboarding with, and turn to in case of an issue.
Hotels solving payment problems
Hoteliers are leveraging integrated payment processing software and solutions to transform their payment processes, improve operational efficiency, and deliver better guest experiences. These case studies highlight how innovative property management systems and payment gateways can solve common challenges, ensuring seamless integration and secure transactions across the guest journey, from automating payment collection to streamlining online payments.
Case study #1: Four Sisters Inns
Four Sisters Inns, one of the finest US boutique hotel groups managing more than 20 properties at prime locations in California, decided to commission the building of its booking engine to meet its brand identity and requirements, including integrating a reliable payment processor.
With a seamlessly integrated payment form provided by Clock PMS+, they have built their custom group booking engine on top of Clock's compliance and certification. That ensures a seamless and compliant collection of transaction data and card details without the expensive and hard-to-achieve PCI certification.
Each deposit payment updates the booking folio and eliminates all errors automatically. When a guest books, the credit card is tokenised with bank-level security and saved with the booking for reuse throughout the guest journey.
Their booking guarantee policies frequently involve phased-off deposit payments, for example, three days before arrival. Four Sisters Inns sets automatic rules that trigger the deposit due automatically. If the first attempt fails, the hotels receive instant notification of a failed payment.
Automating payments across the guest journey
A few days before arrival, the hotel solution sends an online check-in invitation where guests can keep or replace their initial card as a during-stay guarantee. When they do, the card attaches to the booking for instant use, with all further payments facilitated by the payment processing software.
Without a usable payment method, online check-ins would be impossible. They also relieve the reception desk staff, who can focus on delighting guests instead of formalities.
Fusing the hotel platform and the payment gateway, including custom-built and third-party components, improves the guest journey and operational efficiency, which would be impossible if the systems operated separately – regardless of integrations.
Case study #1: Elegancia Group
Elegencia Group, a French group managing 20 upscale hotels in Paris, created payment automation workflows that detect bookings confirmed with OTA virtual or guest credit cards by integrating a payment processor.
The hotel solution and integrated payment gateway then automatically trigger the deposit payment collection at the time of booking for non-refundable rates guaranteed with guest credit or debit cards – or wait with the payment processing until the OTAs unlock the virtual credit card, usually the day of arrival or departure, depending on the OTA policy.
They collect city tax automatically during check-in with separate automated workflows. Based on this differentiation, they can send personalised communication to guests, providing different welcome messages or online check-in instructions.
Using automation rules for OTA bookings
The online check-in automatically recognises if the card on record is virtual and requests a new card from the guest as a stay guarantee, leveraging advanced payment processing software to ensure secure transactions. For bookings guaranteed with guest cards, it will propose to use the original card used for booking as the default, with an option for the guest to change it if they wish.
If a payment fails, the system automatically notifies staff, changes bookers, and even cancels the booking if payment collection fails – releasing the room for instant remarketing. Everything happens automatically to ensure timely collection and releases, allowing staff to spend more time on delightful guest service.
Connecting hotel payment processing
Turning your property management system (PMS) into a hybrid platform that combines property management, guest journey facilitation, and a hotel payment gateway with the right payment processor can make a difference in your hotel operations. It's about solving challenges that get in the way of smooth processes, happy guests, and steady cash flow.
When you automate routine tasks like booking guarantee deposits and cancellations, you're not just saving time but unlocking new revenue opportunities. For example, unpaid bookings or cancelled rooms can return to the market instantly instead of sitting in limbo, thanks to a streamlined payment collection process.
Seamless online payments and features like quick online check-ins make life easier for your team and your guests. Whether someone prefers credit and debit cards, mobile payments like Apple Pay or Google Pay, or even bank transfers, your system can handle numerous payment methods effortlessly. It's a win-win: your guests enjoy a frictionless payment experience, and your staff can focus on creating memorable stays instead of wrestling with outdated systems.
You can eliminate common pain points like delayed deposit returns or mismatched payments when everything is connected, from your booking engine to your front desk. An integrated system ensures secure online transactions for every step of the guest journey, with robust security measures to protect sensitive card details and support compliance.
With the right payment gateway, you also create innovation opportunities. Imagine offering dynamic currency conversion for international guests or using advanced fraud protection to reduce risks on online bookings. These aren't just nice-to-haves; they're the kind of tools that help you stay competitive in today's hospitality industry.
By connecting payments to the entire guest journey, you're creating a better experience for everyone. The right tools make it easy to stay on top of your financial operations, adapt to modern payment systems, and deliver the service today's travellers expect.
Summary
Fragmented handling of payments reduces staff productivity and revenue while increasing administration costs and compliance risks. It also prevents the broader adoption of digital guest services — a key to delighting today's hotel guests. Integrated payment processing solutions, including the right payment processing software, go beyond standard, disconnected payment systems. They form the foundation of a modern hotel platform, enabling advanced property management and unlocking the full potential of the digital guest journey.
While standard payment processors often focus on reducing transaction fees, in-platform payments provide secure payment processing that creates strategic opportunities, saves costs, and drives additional revenue. A hybrid hotel platform controlled and delivered by the hotel solution vendor offers smooth payment processes, better functionality, and easier onboarding while simplifying daily use and reconciliation. Hoteliers benefit from relying on a single partner for support, avoiding the complexities of coordinating multiple vendors.
Clock PMS+ is a hotel solution that connects numerous payment methods to a smooth, automated, and secure experience. Its secure online transactions are backed by one of the most advanced workflows in the hospitality industry, helping you and your staff manage payments confidently. Whether integrating digital wallets, handling credit and debit cards, or supporting dynamic currency conversion, Clock PMS+ makes every transaction easy. A connected payment process is essential to today's guest expectations for contactless payments and versatile payment solutions. Only you can choose the ideal payment gateway and PMS vendor to make that a reality.
Editor's Note: This article has been updated in December 2024.
