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Hotel online payment: Methods, options, and systems

  Posted in Resources  Last updated 2/02/2024

What is hotel online payment?

Hotel online payment is a process through which guests can pay for their hotel bookings and related services over the internet. 

This digital transaction method has become increasingly popular, offering convenience and security for both hoteliers and guests.

Generally there are specific online payment solutions for hotels, which are developed by hotel technology providers.

This blog will take you through everything you need to know about online hotel payments and the best options available for your property.

Table of contents

Why are online hotel payment options important?

It’s no secret that all aspects of our daily life are being enhanced or changed by technology, but a complete digital overhaul – to the point that society becomes completely cashless – may not be too far around the corner. 

From a hospitality perspective, it offers a heightened sense of convenience for guests. Take Uber as an example. Customers get to where they’re going without having to worry about the payment at all; everything is handled digitally after the experience is complete.

If the same service could be offered at all hotels, not only would guests experience less friction but hotels could potentially derive more revenue from extra bookings and amenities.

Some countries are certainly leading the way in the online payment processing movement. The top five countries by percentage of non-cash payments are Belgium (93%), France (92%), Canada (90%), United Kingdom (89%), and Sweden (89%). Asian nations are set to explode in this sphere too.

South Korea is already in the top 10 and is quickly becoming almost entirely cashless. In China, purchasing is shifting from a mobile-first approach to “mobile-only”.

Many of these nations could be cashless in the coming years, so hotels need to be prepared. The first step is automating your online payments.

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7 best hotel payment methods

Offering a variety of payment methods in a hotel is crucial for enhancing guest convenience and ensuring seamless transactions. From traditional credit and debit cards to modern digital solutions, the range of payment options available caters to the diverse preferences of travellers worldwide. 

Here’s an overview of the seven best hotel payment methods:

  1. Credit card or debit card – Bank transfers are a secure method for direct payments, often preferred for larger transactions or group bookings. They eliminate the need for physical card handling, providing a safe option for both parties involved.
  2. Bank transfer – Bank transfers are a secure method for direct payments, often preferred for larger transactions or group bookings. They eliminate the need for physical card handling, providing a safe option for both parties involved.
  3. Online payment gateways – Online payment gateways, integrated with platforms like SiteMinder, facilitate seamless transactions by connecting hotels’ booking systems to various payment methods. They offer a secure, encrypted environment for processing payments, enhancing guest confidence.
  4. Mobile payment apps – Mobile payment apps like Apple Pay and Google Wallet cater to the tech-savvy traveller, offering a contactless, secure, and fast payment solution directly from smartphones, aligning with the growing trend towards mobile-first solutions.
  5. Digital wallets – Digital wallets, such as PayPal, provide a convenient and secure way to make payments online without entering card details for each transaction. They are becoming increasingly popular due to their ease of use and enhanced security features.
  6. QR code – Payments via QR code are gaining traction for their simplicity and contactless nature. Guests can scan a QR code using their smartphone to complete payments, offering a quick and safe option that minimises physical contact.
  7. Gift card or voucher – Gift cards or vouchers are a flexible payment method, allowing guests to use pre-purchased credits for their stay or services. They are an excellent option for gifts and incentives, adding a personal touch to the guest experience.

Image representing hotel online payment

Which is the preferred method of payment for making a hotel room reservation?

The preferred method for making a hotel room reservation largely depends on the guest’s convenience and the specific context of the booking. However, credit or debit cards stand out as the most universally accepted and preferred option due to their widespread use, convenience, and the security features they offer. They provide instant booking confirmation and are suitable for international transactions, making them a go-to choice for most hotel bookings. 

Online payment gateways, which offer a secure and seamless connection to various payment methods, including credit cards, are also highly favoured for their flexibility and efficiency in processing transactions directly through hotel management platforms like SiteMinder.

What does pre-authorised payment in hotels mean?

Pre-authorised payment in hotels is a temporary hold of a specified amount on a guest’s credit or debit card to ensure funds are available for the booking or incidental charges. This hold is not an actual charge but reserves the funds until checkout, when the final payment is processed or the hold is released if no additional charges are incurred.

Trends in hotel online payments and hotel payment solutions

Travellers are becoming increasingly reliant on their mobile devices, and they love the convenience of paying for their goods and services online.

It’s important that hotel operators monitor the rising trends in the hotel payments industry, because knowing how guests prefer to pay for their rooms is vital for maximising bookings at your property.

These are the top six trends in the hotel payments industry right now:

1. The EU is cracking down on online payment processing with SCA

As you can see, Europe’s leading the way in the cashless revolution – and this is very significant for EU-based hoteliers because legislation is tightening in the payments industry in the form of Strong Customer Authentication (SCA), which is part of the second Payment Services Directive (PSD2).

SCA is a set of regulatory requirements that is designed to make paying online more secure and, consequently, reduce payment fraud. 

SCA adds an extra layer of security when customers make a payment online, and this means EU-based property owners need to take steps to be compliant, or you risk not being able to receive online payments.

2. Guests crave seamless online transactions

Rather than checking out at the front desk and physically handing their credit card to your staff member, your guests are starting to expect a seamless, ‘behind-the-scenes’ payment experience.

It would be optimal for them if you store their credit card information, provide them with a breakdown of their fees prior to checkout and automatically charge their card on the last day of their stay—but this requires certain technologies to be in place at your property. 

This eliminates the need for them to spend more time sorting through logistics on their last day and ultimately improves their experience at your property.

3. It is now common for payments to be integrated into the booking engine

The online payment solutions that are now available for hotel operators allow them to eliminate clunky, extra hardware and devices that were formerly used to process transactions.

Rather, the payment portals are located within the booking engine. This not only benefits the guests but the hotel staff as well. 

The booking engine is more intuitive and knows more about what types of payment options are needed within the hotel industry.

4. Going paperless is now the norm rather than the exception

Hotel guests not only prefer the convenience of electronic transaction confirmations, but they also see it as the more sustainable and responsible option.

Rather than printing an itemised record of all charges made during a stay, most guests are happy with an email or text containing the same information.

5. Guests are much more willing to give credit card information online

Consumers are increasingly willing and able to shop for nearly any product or service online. They trust this medium and prefer the convenience online shopping affords them. Naturally, this means that they are also more willing to provide their credit card or payment information online. 

This level of consumer comfort and confidence has led to a direct increase in online bookings for hotels across the globe.

6. Digital wallets and virtual credit cards are on the rise

Credit cards are still the preferred method of payment, but digital wallets (or e-wallets), such as Apple Pay, Samsung Pay, or Google Pay, are considered to be more secure and more convenient than credit cards.

They are not the primary payment method of most travellers, but the number of people relying on digital wallets is rising every year.

If you distribute your rooms on or Expedia, you might already be familiar with virtual credit cards (VCCs). VCCs are digital MasterCards that allow for easy, secure online payments, and are usually managed through a digital wallet.

Each VCC has a unique card number, expiration date and CVC, and can only be used once – for every booking you receive, the online travel agent (OTA) will send you a new one. Therefore, if someone were to compromise the hotel and steal credit card info out of the system, they’re not able to use a VCC because it was a one-time use card.

How to implement hotel payment systems and online payment automation software

Since the rise of the digital era, the hotel payments landscape has served as one of the most complex areas for any hoteliers to navigate.

In large part, this has been due to the fact that hotel payments conceal an incredibly intricate and highly-regulated process that involves the entire hotel distribution chain; typically including an OTA like Expedia or booking engine, a channel manager, a property management system, a payment gateway or processor, and, of course, a hotel

Each of these parties has a critical role to play in the capture and transfer of credit card details before a payment is even made.

As technology drives the digital revolution forward, it will also allow you to be prepared for the transition. There are three main ways you can ensure your hotel is prepared for when it’s processing online payments.

1. Online booking engine

If guests book with you online via your direct channels (website and social media pages), they need to pay online. This means you need a booking engine that integrates with a payment gateway, like Stripe or PayPal, which is a third-party online payment tool. 

An online payment gateway will authorise the credit card information of customers who want to make their reservations instantly on your website. It’s like an online terminal, allowing you to set up and charge a percentage of the reservation or a flat fee upon time of booking.

Your hotel can also simply authorise the complete reservation amount or save credit card profile to process it at the time of checkout or if the guest is a no-show.

Some booking engine providers even offer an in-built payment solution, which makes it even easier for you. You should also make sure your booking system can handle multiple currencies to make the process easier for guests and give yourself a better chance of capturing more bookings.

It must also integrate with your channel manager to allow for a completely seamless experience at your property.

2. Channel manager

A channel manager is critical in facilitating online bookings, and therefore online payments. OTAs such as and Airbnb offer different payment structures, depending on whether they operate on a merchant or agency model.

A guest booking via an OTA will either have to pay upon booking (merchant model), or at check-in (agency model). In the case of the merchant model, virtual credit cards are a common payment method, as we touched on earlier.

However, in the OTA world it’s not that simple when you consider the different businesses in the industry and their model and revenue mixes.

This leads to complex payment processes and agreements between hotels and OTAs, related to timing, PCI regulations (how credit card information is saved and stored), PSD2/SCA (online payment regulation in Europe) and more.

Let’s use Expedia as an example. Expedia Traveler Preference combines both agency and merchant revenue models. When the merchant model is used, the charge is made upfront: when a guest elects to pay upon booking, funds are collected via the Expedia Collect merchant model.

Expedia charges the customer’s credit card and then pays the merchant the agreed upon amount once the stay has been completed at the hotel. Profits can reach up to 30%, depending upon the travel market, inventory/availability, and seasonal fluctuations.

Should a customer opt to pay in-person at the hotel, Expedia’s Hotel Collect agency model is used, with or without a deposit requirement. Commissions – typically between 20-25% – are paid to Expedia by the hotel following payment receipt from the customer.

However you need to accept payment from an OTA, the payment and guest information needs to be transferred securely and seamlessly from the booking site to your hotel’s front desk (and vice versa in the case of cancellations and refunds). A channel manager automates this process for you.

3. Two-way PMS integration

A property management system is also key to streamlined online payment processing. A PMS is fantastic for automating all the processes involved with collecting, storing, and communicating guest information.

If you don’t have one already, look for a PMS that offers an in-built booking engine, channel manager and payments solution (check out an all-in-one solution like Little Hotelier if your property has less than 30 rooms). 

Otherwise, check that it offers integrations to these systems. That way, any booking and payment information is transferred directly from the place of booking (whether that’s your website or an OTA) straight to your front desk.

How to prevent  scams in hotel online payments

With so much travel now being booked online, the opportunity for hotels to increase sales is getting bigger all the time. However, it also creates challenges in making sure customer payment data is protected and that no breach occurs at the hands of hackers or fraudsters.

The vast majority of security compromises occur at point-of-sale (POS) systems and are most often Card Not Present (CNP) fraud.

Because CNP transactions are so prevalent in the travel industry and much information is exchanged between hotel and customer, it’s important to know when you might be at risk and how to prevent any data breaches from happening.

Since guests expect a hotel to be a safe place to escape to, even a single instance of failing to protect a customer’s data could have huge ramifications on your reputation and finances.

Here’s what to look out for:

Hurried purchases

It’s common for fraudsters to contact you in a panic, wanting to rush to set up their accommodation. It’s important you don’t get flustered. Take adequate time to verify their credit card, passport details, and other relevant documents to make sure they genuinely are who they say they are.

First-time guests

It makes sense to be more cautious of people who haven’t booked with you before. With regular customers you can build a relationship and learn their purchase habits. Be aware of a first-time customer who contacts you online to make a large purchase. Collect all the necessary verification information. 

For greater security, adopt a payment solution that is designed to capture transaction data in an intelligent manner.

Purchaser location

These days many fraudsters have become adept at hiding their true location and stopping themselves being tracked. If you do have suspicions about a customer, do everything you can to verify their legitimacy, including calling and emailing them to collect data and confirm their identity.

Inconsistent addresses

One of the biggest warnings that everything is not what it seems is when someone wants to use different addresses for billing and shipping, which may not apply as strongly to hotels but is very relevant for the travel industry in general.

5 best practices to keep your hotel booking payment gateway secured

Security in payment processing is crucial for obvious reasons, but less obvious are the practical measures that hoteliers can take to mitigate a risk of security breach. Here are a few places to start:

1. Use systems that can secure your customers’ cards

You need to use a hotel payment system (ideally integrated into your PMS or booking engine) that can send and receive card authorisation digitally and store it all securely in one place.

2. Inform all managers and employees of company policies

Every employee should know the policies at your hotel regarding compliance and safe handling of customer information. They all should be trained on the software you use and have a consistent process to follow each time a purchase is made.

3. Protect your POS systems

Make a point of investing in the latest cyber security tools including encryption, anti-virus software, and firewalls to safeguard against POS attacks and other malware hackers may target you with.

4. Comply with PCI security

The PCI Security Standards Council fights hotel credit card fraud by maintaining global payment card industry standards. Ensure your hotel is committed to PCI compliance.

5. Vet third parties

Your hotel may often deal with airlines, car rental companies, retail organisations, hotel technology providers, and other suppliers. Make sure all these partners – which become access points – are committed to information security best practices just like you.

By Dean Elphick

Dean is the Senior Content Marketing Specialist of SiteMinder, the leading technology provider delivering hoteliers unbeatable revenue results. Dean has made writing and creating content his passion for the entirety of his professional life, which includes more than six years at SiteMinder. Through content, Dean aims to provide education, inspiration, assistance and value for accommodation businesses looking to improve the way they run their operations achieve their goals.

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