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Purchasing goods and services online has been available to consumers for some time now. The functionality behind how eCommerce transactions work is rarely or never questioned, it is simply accepted.
While online payment processing has been widely adopted in many sectors, the hotel industry has been slow to embrace it. How online payment processing works can be a bit daunting, but it is well worth becoming comfortable with.
In this article, we explain how the traditional payment processing works and how it has evolved into the online world. We then explain how it works on your hotel brand website and how you can use P3’s technology along with Oracle Payment Interface to streamline your eCommerce payment processing while maintaining the highest data security standards.
A Brief Overview of Payment Integration Processing
Traditionally, the payment process encompasses a connection between a merchant acquirer (Elavon, Worldpay or AIB Merchant Services), a payment gateway provider (FreedomPay, Verifone, Adyen, Ingenico) and a card network provider - such as VISA, Mastercard, Discover or American Express.
Any retail business that receives card payment at the point of sale needs to have an account with a merchant acquirer. The payment happens via a PDQ machine (also called PDQ terminal), which is a piece of hardware that connects to the merchant acquirer account to handle credit or debit cards transactions.
This same traditional process occurs at the hotel so that guests can pay for their room reservation. Your hotel probably has a PDQ machine so that guests can pay for their stay in-person with a debit or a credit card via pin and chip payment at the time of check-in or check-out.
Evolution to Online Payment Processing
The payment processing is a key part of the customer journey, and technology needs to address both online and offline consumer needs. With more and more transactions being processed online, payment providers have evolved to the online world to allow customers to easily make purchases on any device, at any time.
One of the biggest advantages of payment integration is selling advance purchase rates or securing booking deposits against holiday season rates, for example requesting a 20% deposit for Christmas packages.
When a hotel implements online payment processing in their website booking engine, eCommerce payment gateway software is installed. That software serves as an interface with the merchant acquirer and the card network to allow card transactions. In doing so, it allows your guests to instantly secure their reservation using their credit card as they book it on your website.
Online payments need to be processed in the most secure and reliable way. You may have noticed that when initiating an online payment with a credit card, sometimes the website asks for a two-factor authentication to grant access to your card details before completing the transaction. This is the new European regulation called Payment Services Directive (PSD2) that aims to prevent online credit card fraud. The two-factor authentication is sent to the payment gateway provider to verify that the transaction looks safe before approving it.
How Online Payments Work on Your Booking Engine
Some booking engine companies work on the basis of capturing the credit card information at the time of purchase and sending it to the hotel’s property management system, such as Opera. Your front desk staff then needs to manually enter the card details via the PDQ machine to secure payment or just to check the validity of that card.
The risk for the hotel in this situation is that if the card gets declined, your staff then needs to contact the guest to ask for a new credit card number or they need to cancel the reservation. This is not only time-consuming but it can also lead to rooms being left unsold if bookings are made close to the intended arrival date. Moreover, any transactions handled through the PDQ machines are classed as "card holder not present", which leaves the hotel wholly liable for any chargebacks.
The much more preferable approach is to accept online payments with credit cards on your brand website. To begin this online processing, you need to have an account with both a merchant acquirer and a payment gateway provider.
Once the needed accounts are in place and the eCommerce gateway software installed, the recipient can accept payments in two different ways. A set of Open APIs can be used to connect your booking engine directly with the eCommerce gateway, or iframes can be provided to redirect the guest to the eCommerce gateway hosted payment page.
To optimise the booking process and maintain a good conversion rate, it’s better to connect your booking engine using the payment gateway API as it creates a simpler user journey for your guest. This process in place, at the time of reservation creation the booking engine captures the guest credit card information and sends it to the payment gateway provider to verify and authorise the card. The authorisation code comes back to the booking engine in real-time, signalling that the credit card is in good standing and that it is ok to process the reservation.
The authorization code having been received, the P3 booking engine asks the payment gateway (through the API) to pay the full amount of the reservation for advance purchase rates. Alternatively, a pre-authorisation can be requested to ensure that the credit card being supplied is a genuine valid credit card.
With an integrated payment system, you can enable a range of payment methods and tools such as dynamic currency conversion (DCC) and secure customer authentication (SCA). This allows you to offer a flexible, customer-centric payment experience to meet the needs of every guest in any geographical location whilst protecting your hotel from fraudulent and bogus bookings.
How To Integrate Payment Processing on Your Booking Engine
Integrating a payment process in your brand website will depend on the capabilities of your booking engine provider.
Booking engine providers like P3 have already-installed API software, so can automatically connect with the eCommerce gateway of your choice to allow real-time authorisation of the credit card payment at the time of booking. In this way, there’s no need to manually enter the card details via PDQ machines.
P3’s booking engine is integrated with many different payment gateways to ensure the best fit and performance for any given hotel. Hotels can choose to work with their preferred eCommerce payment gateway company as P3 has already integrated with the major providers throughout the world, including Freedom Pay, Stripe, Adyen, Global Payments and PayPal.
At P3, our booking engine updates Opera and confirms that the deposit was made for the required amount. Our system talks to the payment gateway and Opera simultaneously, ensuring that the entire transaction happens in real-time so the process is fully automated, leaving no manual steps to be handled by the reservations or finance teams.
This same payment integration also works at the time of online check-in. You can ensure that full payment for the room has been charged to the guest credit card before you allow them to complete the online check-in.
Payment Integration with Oracle Payment Interface
If your hotel is equipped with the OPERA Property Management System, you may have heard about Oracle Payment Interface (OPI). But what is it?
OPI is Oracle’s own eCommerce payment gateway that connects with several different merchant acquirers to process credit card transactions from within Opera.
The OPI supports tokenization of card data in the Opera database for additional and stronger data security. Credit card transactions can be processed by the Opera application or manually entered via the payment device.
OPI allows Oracle partners, such as P3, to support payment integration within Opera with payment gateway providers such as FreedomPay to provide fast, secure and reliable payment processing for hotels.
The Use of Debit Cards in Hotel Transactions
In the hotel landscape, the use of debit cards can cause many problems for both guests and hoteliers. The use of debit cards is new but it’s becoming more widespread throughout the world. The difference between a credit card and a debit card is that the former has use of a “credit facility”, which is separate from a person’s checking/current account, while the latter has direct access to the funds available in the checking/current account with which it is associated.
When checking in and paying for a hotel room, hotels usually ask for a pre-authorisation of the card. With debit cards, the amount pre-authorised is instantly removed from the guest checking/current account. As hotels tend to pre-authorise not only for the room but also for incidental charges, the amount being pre-authorised is usually higher than what the guest has to pay when checking out of the hotel.
The surplus balance that was pre-authorised can then take up to 10 days to be refunded to the guest’s checking/current account. This can cause concern for many guests who assume they have been overcharged by the hotel and will frequently contact the hotel post-stay looking for an immediate refund.
However, hotels can prevent these problems by managing the process better. At check-in, some hotels refuse to pre-authorise debit cards and instead charge upfront for the room, disabling the ability for guests to post incidental charges to their room.
Other hotels have trained their reception staff to be very clear to the guest during check-in what will happen when pre-authorising a debit card. Our online check-in/out software has been configured to allow hotels to manage the use of debit cards in the same way they do in the offline world.
Conclusion
With the urgent priority of capturing direct bookings on hotel brand websites, and with the commitment to provide both guests and hotel operators with a range of payment options, it is crucial to understand the intricacies of how online payment integration works so that you can choose partners that have the capabilities to deliver what your hotel needs to succeed online.
Accepting credit card transactions through your brand website and booking engine should be easy and hassle-free.
With a merchant acquirer account, a payment gateway provider and a booking engine partner that can deliver an integrated payment processing, your hotel will be able to handle online payments frictionlessly and securely.
If you have any additional questions about payment integrations or Oracle Payments Interface, feel free to contact P3. Our team will be happy to help.
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