Picking the right integrated payment solution for your online bookings
By Nicole Irschick, General Manager, Seekom
Online bookings make up a large portion of most accommodation providers’ revenue. That’s the reason many hotels, motels and holiday parks put so much effort into ensuring the booking engine on their website is easy to use and presents their accommodation in the best possible light.
However, there is another link in the online booking chain that isn’t always given the attention it deserves, and that’s the payment solution you chose to handle online card payments.
This is the technology that ensures payments made by your guests when they make a booking are transmitted securely to a payment processor and can ultimately make it into your bank account.
There are a myriad of payment solutions available, ranging from having separate arrangements with an acquirer, payment gateway intermediary and a network, to a simple one stop shop such as SeekomPay that provides a full payment solution with seamless integration into the Seekom property management software.
The payment solution you choose can have a big impact on your balance sheet and cash flow, so it’s worth taking the time to consider a few key points when deciding which one to use.
Integrations - will the payment solution work with your existing systems?
If you’ve invested a lot of time into your website, online booking engine and other systems, you will want to make sure the payment solution you choose plays nicely with them.
There are many solutions available that can be integrated with your platform of choice. For example, Seekom works seamlessly with our SeekomPay solution and we also offer integrations with a range of other payment gateway providers.
Before you settle on your payment solution, consider the systems you currently use and make sure they offer integrations with your preferred choice.
Security – is it PCI compliant and does it protect customer card details?
According to Statista, e-commerce losses to online payment fraud were estimated at US$41 billion in 2022. For this reason, security should be high on your list.
The gold standard for security, and the one all online merchants should aspire to, is Payment Card Industry Data Security Standards (PCI DSS) compliance. PCI DSS is a set of international security regulations implemented by card schemes to safeguard credit and debit card transactions while preventing the misuse of cardholders' personal information.
Using a PCI DSS compliant payment solution means transactions are securely encrypted and appropriate steps are taken throughout the transaction chain to protect your customers, and yourself, from the impacts of fraud.
Some payment solutions also offer ‘tokenisation’, which allows a customers’ credit card details to be securely stored. This is particularly useful if you have repeat bookings at your accommodation as it means guests won’t have to enter all of their card details to pay every time they book online with you.
Another consideration is whether the payment solution uses 3D Secure 2.0. This technology analyses each transaction made on a card and gives it a risk rating. If the transaction is deemed high risk, the customer is required to provide further evidence of their identity, often by entering a password or a code sent to their personal email or mobile device. This can reduce fraud stemming from stolen cards.
Payment options – what payment methods does the solution support?
The purpose of your payment solution is to help facilitate payments from your customers, so it makes sense to consider what payment methods it supports.
Think about the credit cards your customers use and any other ways they like to pay for their bookings and choose a solution that supports those methods.
Also consider whether or not you need a physical payment terminal. Payment terminals generally attract a monthly fee, and if your guests are almost entirely booking online (and rarely pay on site), you could be saving money by setting up a virtual terminal, if this is supported by the payment solution you're considering.
Simplicity - does your payment solution involve several parties, or just one?
The world of payments is complex and it helps to understand the differences between various links in the payments ‘chain’, so you can assess where you might be able to minimise unnecessary overheads and agreements with different providers.
For payments to be fully processed, there are three key components:
- the payment gateway, which is the secure online page where a customer enters their credit card details to complete a transaction.
- a merchant acquirer, which is the financial institution that processes transactions they receive from the payment gateways or your on-site terminals, on your behalf. They act as the intermediary with the ‘schemes’ (e.g. Visa, Mastercard), to approve transactions and then settle those into your bank account.
- The network (e.g. EFTPOS NZ or Worldline), which sits between the gateway and the merchant acquirer.
Many accommodation providers will have separate agreements with each of these entities to enable payments to be processed, and in some cases they won’t be integrated with the accommodation provider’s property management system. Other payment solutions, such as SeekomPay, facilitate all of these components, making life simpler and more often than not, saving money.
Fees – what will your payment gateway cost you?
Another consideration is cost.
Payment gateway providers typically charge a monthly fixed fee, plus a fee on each transaction they process. Usually they’ll charge a minimum monthly fee if your transactions fall below a certain threshold.
Merchant acquirers charge a merchant service fee (a percentage of the transaction value). In some cases merchant service fees are charged as a ‘blended rate’, where all card types incur the same fees, while in other cases an acquirer may charge different merchant service fees depending on the card type, i.e. a rate for domestic debit and credit cards, a rate for commercial & premium cards and then an additional loading for international cards.
Networks charge a monthly fee in New Zealand.
The fees and rates you will pay for your full payment solution can vary, so it’s worth checking what kind of impact they will have on your bottom line. It’s also worth finding out about any other hidden fees, along with potential initial setup fees.
It’s a balancing act – looking at the best merchant service fee alone might not be the best deal for you if you’re also paying fees and charges to other providers, needing up to three separate direct debit arrangements and missing other components, such as the benefits of having a solution that is fully integrated with your property management software. And remember, you can offset your merchant service fee by applying a surcharge. This is common globally, including in Australia, and is becoming more accepted in New Zealand.
Support – if something goes wrong, who can you call?
While payment solutions should run without a hitch, payments involve complex infrastructure and there is always the possibility that something could go wrong. If the worst happens, will you be able to get support or information quickly?
For New Zealand and Australian accommodation businesses, there is benefit in choosing a local provider with a support team that operates in the same time zone. You will also want to make sure you can reach them on the phone if needed – there’s nothing worse than having an urgent issue and only being able to contact support by email.
So you’ve chosen your payment solution. What’s next?
Choosing the right payment solution is the hard part, but before you can start accepting credit card payments from guests for the first time or via your new chosen solution, you'll need to complete and submit a merchant application form.
This application is a prerequisite to establishing a merchant account with your chosen payments provider, and requests information such as business profile details, owner details, processing details, and transaction information. It allows the merchant acquirer to obtain a profile about you and your business and helps them assess the merchant application for approval.
To ensure you don’t have to stop-start when completing the application form, be prepared and make sure you have certain things on hand, such as:
- a form of ID (e.g. driver’s licence, passport)
- proof of bank account
- proof of trading address
- average transaction size and annual turnover.
Completing application forms can be a daunting task and sometimes puts people off from changing providers, even though it is financially beneficial for them. At Seekom we make this process as easy as possible by pre-completing as much of the application as possible based on discussions with our customers. All they need to do is to complete the sections that require proof of ID, bank account and trading address.
Once done, the application will be assessed for approval. Once approved, you will be onboarded as a merchant and can soon begin accepting guest payments.
If you opt to have a separate payment gateway intermediary you’ll need to complete a separate application in addition to the merchant application. The requirements for this application are typically not as intensive as for the merchant application.
Whatever you choose, it’s worth monitoring your performance and keeping your options open as online transactions can play a large role in the success of your accommodation business. In this regard it may be helpful to choose a provider that doesn’t lock you into a long-term contract – our own SeekomPay solution is provided on an open-term agreement so you can join and leave as you please.
Interested in using SeekomPay? Seekom is offering to waive SeekomPay sign-up fees for any businesses that join before the end of October 2023. To find out more, visit Seekom’s website.