Hotel Credit Card Processing

The hospitality business is no joke. As a business owner, you need to offer guests top-notch services at all times. Besides this, your payment processing should be safe, efficient, and always available.  

With our years of experience at PaymentUSA, we strive to offer the hotel merchant services to help you offer suitable payment processing options. There’s a revolution in the hospitality industry, and your establishment will be left behind if you don’t catch up. 

The topic of payment processing for hotels is often complicated. But this article will clear up your questions. Before we discuss how it works, we’ll start with the primary payment methods available. Then we’ll consider which provider carries the best credit card processing for hotels.

What Is Payment Processing?

In the past, hotel payments were mainly about cash and handling change. However, with the arrival of credit cards, things have changed. For your business, receiving credit card payments is not straightforward. 

When a customer uses a particular method (for example, a credit card) to make payments, the issuing bank must grant credit to cover the cost of the purchase. All this happens within minutes after they swipe the card or use your online booking platform to make a reservation. 

Payment processing comes with charges known as interchange fees. To cover these, payment processors function as a middleman to collect the funds. There are markup fees to cover too. Depending on your payment processor, you could pay a fixed rate, percentage charges, or a combination of both.  The service also comes with chargeback protection, which we will talk about later.

How does Hotel Credit Card Processing Work?

Processing payments as a hotelier is a straightforward process. Since a majority of Americans prefer using credit cards for hotel payments, we will base our description on this option. 

When taking payments, here are the steps. 

  1. Guest presents card for payment.
  2. Your employee uses the computer system and swipes or taps the card on the equipment. This information is sent via an encrypted payment gateway to the payment processor. 
  3. Your payment processor sends a request to the issuing bank through the card network for authorization and release of funds. 
  4. The issuing bank (customer’s bank) agrees to cover the fees on credit with a code or other forms of approval. This is sent back to your front desk, and the receptionist acknowledges it. At the same time, an automated invoice is sent to your guest’s email address. 
  5. The issuing bank transfers the fund to your hotel merchant account. Depending on your provider, these funds are accessible within three days. 

The entire process takes minutes from start to finish. While it looks straightforward, there are instances where an issue can occur. For example, the issuing bank could decline the transaction. Your payment processor’s responsibility is to ensure they relay the information quickly before the front desk allows guests access to your facilities. 

What are the Main Payment Methods?

The right hotel merchant services come with a list of payment options for your establishment. This allows you to be versatile and appear professional. Here are some of the main methods customers use to complete payments for hotel bookings. 

Credit card

Credit cards have become the primary tool for making hotel reservations. As the name implies, a credit card allows users to borrow funds and pay them back later. Depending on the terms and conditions, they will have to pay back the money with interest. 

There are several options for credit card networks available, and you can get lower interchange rates for credit card processing for hotels. 

Debit card

Debit cards are the next most popular mode of payment for hotels. Like credit cards, most come from banks. With a debit card, the payment processor deducts the payment directly from the guest’s checking account. Also known as a “bank card” or “check card,” payment is immediate. You may not need a payment processor, as the payment should instantly reflect in your business account. 

Virtual payment

Next is the virtual payment that is done online without the physical presence of a card. Guests use either a virtual card or mobile wallet to complete such transactions. The idea behind virtual payment is to issue a temporary credit card number. With this, customers can quickly pay for reservations without using their main card number to complete the transaction. 


Although cash payments were the norm for payments, it is no longer the frontrunner option. Guests who don’t want to pass through the stress of using cards or virtual payments settle for a cash payment. However, fewer and few Americans carry cash these days.

Mobile wallets

Also known as e-wallets, mobile wallets allow customers to store information on their smartphones. There are a number of options available that the best hotel merchant services cover. Top examples include Samsung Pay, Apple Pay, and Google Pay. The mobile wallet is a significant stakeholder for contactless payments, and guests who use online booking engines to make reservations use this payment option. 

Top Payment Processing Types for Hotels

All transactions are divided into three main classifications. They are:

Card present transactions

The card present transaction refers to situations where the guest is at the front desk and issues their credit or debit card for payment. To prevent confusion, the customer must insert the card in the allotted space and enter the pin (if necessary) to complete the transaction. 

Card not present transactions

The card not present or MOTO payment transactions are the opposite. You don’t need the customer’s physical presence to complete a payment reservation. All your staff need is the card information, which they will type to complete the transaction. There’s also the option of saving the card details. 

Card not present transactions also use hotel credit card processing systems since the credit card is the primary source of hotel payments. 

Virtual payment

Next is the virtual payment that is done online without the physical presence of a card. Guests use either a virtual card or mobile wallet to complete such transactions. The idea behind virtual payment is to issue a temporary credit card number. With this, customers can quickly pay for reservations without using their main card number to complete the transaction. 

Contactless transactions

The contactless transaction can be a hybrid of the card not present and card present transactions. Your customer can be at the front desk and decide not to pay via the physical payment terminal. Instead, they only have to swipe their smartphone or scan a barcode to make their payment. The payment details are transferred via an encrypted gateway via the device. Mobile wallets or e-wallets fall into this category. 

Moving From Offline to Online Credit Card Processing for Hotels

We understand that many customers still come in person to book rooms physically and make reservations for other facilities. Yet, you may be missing out on opportunities if you do not utilize the online route. Currently, many guests enjoy the thrill of shopping for goods and services online, including hotel rooms. 

What this means is that they’re willing to pay for services online by providing their credit card details. This has led to a rise in online bookings through reputable travel agencies. The benefits are many, giving you an excellent chance to scale up operations. 

Here’s a glimpse of what your hotel will be like with and without online hotel credit card payment processing. 

Without online credit card payment processing

Your staff will have to start the process of entering credit card details at the front desk. The guest will have to wait a while for an access code from the issuing bank to show it is approved. 

Once they send the access code, you can see the credit card’s details. Here, you can begin payment via your payment gateway or the card payment terminal. In addition, the details of the transaction need to be typed in manually on the hotel management system for easy recording. 

Furthermore, there’s a separate process for when your guest is checking out. If there is a balance, your front desk must pass through a similar procedure to confirm the payment and pay it out. 

The dangers of this are many. For one, your clients are sure to waste time at the front desk – a huge problem for those on tight schedules. 

With online credit card payment processing

Using online hotel merchant services to manage your payment gateway is straightforward. First, it automatically logs the transaction into the hotel management software. After your customer swipes the card and the transaction is confirmed and authorized, guests need not pass through the same process again. The front desk only needs to confirm the payment, choose the card details, and charge it there. 

The best hotel merchant services have software readily compatible with top management tools. This helps with integration to an encrypted payment gateway. Hence, it saves time since your staff no longer need to record the transaction in the management system. 

Hotel Credit Card Processing Fees

Several parties are involved in hotel credit card processing, and each player charges a fee. Most times, you, as a merchant, cover most of these fees. Regarding hotel merchant services, there are three credit card processing fee classes.

Interchange fees

The customer’s issuing bank charges this fee, which they transfer to your payment processor, who transfers it to you. They usually calculate this amount as a percentage or a fixed charge. No matter the issuing bank, this rate is not negotiable. 

Assessment fees

The assessment fees come from the credit card networks for a number of services they offer. Like the interchange fee, it is non-negotiable and based on a number of factors. 

Payment processor fees

Your payment processor charges this, which includes the per-transaction percentage and monthly charges. Others could be for chargebacks, set up, and renting terminals. Here, you can negotiate the fees to make them more affordable. 


Chargebacks have become a leading factor in why hotel merchant services are expensive. Chargebacks occur for several reasons – some within your control, some not. 

As you may expect, they often go in the cardholder’s favor, and it rests on you to prove that the transaction is authentic. 

The causes vary and could include billing errors, lack of permission before charging the card, and below-par services. For hoteliers, many chargebacks come from “friendly fraud,” where your guest is not satisfied with the service and decides to file a complaint with their credit service company. 

Chargebacks are expensive all-rounders. Besides the bad reviews, they saddle the hotel with the fees that come with refunds. This does not include the time it takes to resolve such matters. A typical chargeback case costs $25 in charges, minus the refunds. Even if you appeal and win, the fee is non-refundable. 

To prevent cases of chargebacks:

  • Be truthful about the conditions of your services. Ensure that your marketing captures the actual situation, so guests understand what they’re paying for. 
  • Be open about your pricing conditions. Make a conscious effort to show transparency in fees, refunds, taxes, and cancellations. Ensure that your staff answer questions about the policies, and stress that your guests can always ask for clarifications. 
  • Online payment processing is essential. Part of PaymentUSA’s strategy is sending an electronic invoice instantly to your guest’s email. This allows them to know what they paid for. Besides, it’s a great way to get the customers to agree to the terms and conditions. 
  • Stay proactive. Ensure to ask for reviews from your guests when they’re in your facility and at checkout. This shows you’re open and committed to the customer’s satisfaction. 
  • Ensure to respond to chargeback cases quickly. Provide the necessary documentation that shows the charge is legitimate. It’s better to process all charges first to avoid chargebacks. 
  • Select a suitable payment processor with top strategies to protect your investment. It will help if you prioritize providers with good hospitality industry experience and state-of-the-art fraud prevention technologies.

Choosing the Right Payment Provider

With the peculiarities of hotel credit card processing, finding a suitable processor with the right tools to protect your interests is essential. Here are some pointers to tick off when researching.

  • PCI compliance. The ideal provider should have practices in line with PCI regulations. This will help to protect you from chargebacks and fraud. This compliance should also cover SCA, PSD2, and 3DS guidelines. 
  • 24/7 support. The hospitality business is an all-year industry, which should be the same for your payment provider. This will help you resolve problems at the earliest possibility, so you don’t have to keep your customers waiting. 
  • Transparent and affordable pricing. It’s essential that you stick to providers that offer fair billing rates. 

The Best Credit Card Processing Solution for Hotels

Credit card processing for hotels can be challenging, but you only need the right solution to make it work. In your quest to make your hotel a home away from home, PaymentUSA can make your dreams come true. 

With top strategies, you can be sure of getting affordable billing that stands the test of time. If you’re yet to start accepting credit card payments, our representative can walk you through getting hotel merchant services for your establishment. 

Our services include fraud prevention technologies, full policies for chargebacks, and professional guidance. 

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