The Benefits Of Being Out Of Touch

By Dennis Nessler | May 19, 2020

By Larry Mogelonsky

The post-COVID new normal will require all hotels to investigate ways to make cash all but obsolete so as to prevent direct contact between staff and guest. For these distancing-friendly initiatives, touchless payments will be in high demand, but the issue therein is that card-not-present transactions can lead to more security risks and chances for chargebacks to the hotel.

As we all gear up for a return of regular operations, now is your chance to implement the necessary updates to ensure your payment channels are as secure and contactless as possible, while also reducing chargebacks wherein the credit card companies usually don’t side with the hotel (otherwise known as the ‘merchant’).

As an asset manager for an independent property, there have been numerous instances when I’ve 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 has always been a major pain point that trickles out to impact nearly every outlet where credit cards are 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 or manual posting to the correct ledger within the PMS, thereby breaking the chain of evidence that’s all electronically collected.

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. 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 three-fold to five-fold 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.

Online payments don’t have to be a chore to setup either as the best platforms have open APIs and seamless bolt-on capabilities so that you don’t have to worry about software conflicts. 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 this coronavirus travel hiatus. ____________________________________

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 larry@hotelmogel.com to discuss hotel business challenges or to book speaking engagements.