Protect Your Hotel From Fees That Needlessly Drive Up the Cost of Accepting Card Payments

By Bob Carr Chairman & CEO, Heartland Payment Systems | April 09, 2010

Interchange rates, rate increases and undisclosed mark-ups

No doubt, you have heard the old adage, “you have to spend money to make money.” While there may be relevance to that statement, understanding a few key pieces of information about card processing can ensure you’re not spending more than you have to when it comes to accepting electronic payments.

As a hotelier, accepting credit and debit cards for reservations and room payments is a way of life. However, recently, you may have noticed the mounting cost of these transactions. By the time a card is swiped, processing fees for a single transaction can range from two to five percent of the total sale. The fees for card processing services may be among the three highest expenses your hotel incurs, perhaps outmatched only by labor and property costs. Unlike overhead costs, you might not be sure what you are paying when it comes to processing card transactions. Yet, it is critical to identify all of the fees and surcharges — and who you’re paying them to — so you can further control your expenses and save money.

The fact is there are three components of processing fees you, like every card-accepting merchant, must pay: interchange; dues and assessments; and processing fees. Understanding exactly what these fees are — and why you’re paying them — can help you eliminate unnecessary costs and boost your bottom line.

Interchange

Interchange is the fee charged for passing financial transactional information back and forth between your hotel, your payments processor, the card brands (such as Visa®, MasterCard® or Discover® Network) and the banks that issue credit and debit cards. Interchange rates are determined and imposed by the card brands so banks that issue credit and debit cards can recoup their costs.

Coming up in January 2018...

Mobile Technology: Relentless Innovation

Technology has become a crucial component in attracting and retaining hotel guests, and the need to enhance a guest’s technology experience is driving a relentless pace of innovation. To meet and exceed guest expectations, 54% of hotels will spend more on technology in 2018, and mobile solutions in particular will top the list of capital investments. Many hotels are integrating mobile booking, mobile keys, mobile payments and mobile check-in into their operations. Other hotels are emphasizing the in-room experience, boosting bandwidth and upgrading flat screen TVs to more easily interface with guest mobile devices. And though not yet mainstream, there are many exciting technology developments on the near horizon. The Internet of Things (loT) is taking form in some places, and can be found in guest room control systems, voice activation systems, and in wearable sensors that can be used for access and payment options. Virtual reality headsets are available at some hotels so guests can enjoy virtual trips to exotic locations or if off-property, preview conference facilities and guest rooms. How long will it be before a hotel employs a fleet of robots for room service, or utilizes a hologram as a concierge, or installs gesture-controlled walls that feature interactive digital displays? Some hotels are already using augmented reality for translation services, or interactive wall maps, or even virtual décor. This pace of innovation is challenging property owners and brands to stay on top of the latest technology trends while still addressing current projects. The January Hotel Business Review will explore what some hotels are doing to maximize their opportunities in the mobile technology space.