Understanding Credit Card Authorization Process for Hotel Payments

Did you know that one of the biggest challenges in the hospitality industry is dealing with separate payment systems and credit card authorization? This fragmentation slows down the process considerably, and it creates a lot of frustration among business travelers.

For example, users often cite slow payment and credit card authorization processes as a particular pain. This is particularly evident in travel sectors, where nearly 25% of employees rate it highly frustrating. This leads to lower trust in the corporate travel management process and invites pushback regarding adoption. When asked how their processes could be improved, the overwhelming response was the need for increased automation and speed.

Some other challenges include check-in denials if CC authorization or CC auth is not sent or the card used for booking is unavailable with the traveler during check-in. Moreover, sending credit card information to hotels carries inherent risks, including the possibility of the card details being compromised or unauthorized extra charges being applied. . 

A solution to the above-mentioned hurdles is credit card authorization for hotel payments. Read on to understand the complete CC authorization process in business travel.

Who Needs Credit Card Authorization?

The credit card authorization process serves multiple purposes for guests, ensuring convenience, security, and smooth transactions.  

Split Payments: Sometimes, an invoice may require two separate credit cards. For example, a guest may want to split the cost between personal and corporate cards. Managing this directly through an online booking system can be difficult. Then, you can use the credit card authorization process instead.

Booking on Behalf of Others: Sometimes you have a reservation for someone else. Some cases include:

• Travelers without a physical card: Guests who do not have their credit card with them upon arrival (e.g. lost, forgotten, or left at home) may use the authorization form.
• Business travelers: Employees on business trips generally need a credit card as their company pays for their stay. This is common in corporate travel planning.
• Minors or young adults: Parents may authorize their credit cards to pay for hotels for children traveling alone.

In such cases, you authorize credit cards for hotel payments, and CC authorization forms come into play.

What is Credit Card Authorization for Hotel Payments?

The credit card authorization process for hotel payments is the legal contract between the hotel and the travel manager that permits hotels to charge a specific card. In that process, the hotel sometimes puts a $1 hold to check if the card is valid and active. This is done to ensure they have sufficient funds to cover the cost of their stay, including room rates, taxes, and contingencies.

Step 1: Source the form

In the initial step of the credit card authorization process, the guest must submit a credit card authorization form, providing their credit card information. 

The CC authorization form usually requires the following details to be filled out: the guest’s name, card number, card interface, expiration date, billing zip code, hotel name, license, and signature to date.

Subsequently, the hotel typically performs a validation check by authorizing a nominal charge of $1 on the provided credit card. This minimal transaction confirms the validity and authenticity of the credit card details provided by the guest. 

Here’s an example of an Authorization Form for Marriott.

Step 2: Checkout

This authorization is not a charge but a hold that reduces the guest’s available credit balance. The hold is typically placed at check-in and can remain for the duration of the guest’s stay, adjusted as necessary based on incurred charges. Some hotels put this hold, whereas others may not.

Upon checkout, the hotel finalizes the actual charge, and the hold is released. Any unused amount becomes available again on the guest’s credit card.

Here’s the Detailed Credit Card Authorization Process for Hotel Payments

Reservation Stage: Booking

• When guests book a room, they provide their credit card information through the hotel’s secure online booking system. This system ensures that card information is kept confidential during transmission and protects it from potential data breaches and unauthorized access.
• The encrypted card information is transmitted to the hotel’s payment processor. When the card is presented, it is checked for authenticity and funds availability.

Pre-Authorization

• To ensure your reservation, the hotel may apply a prior authorization to the credit card. This idea is a temporary savings of a certain amount, usually the cost of a night’s stay or part of the total amount of the booking.
• A previously held authorization confirms that the credit card is active and has sufficient funds. This hold does not charge the card immediately but holds the funds to ensure the guest can pay for the charge. Your reservation will be confirmed once you authorize credit card for hotel payments.

Check-in Credit Card Authorization Process

Card Validation

• Guest Doesn’t Have Booking Card: If the business traveler doesn’t have access to the card used for booking, they might be able to use a different card in their name, a company credit card for incidentals, or reach out to the booking party (usually the company) to confirm the reservation and discuss alternative payment arrangements. itilite shares a virtual card with hotels and reconfirms before check-in. No hassle of check-in denials.
• Validating a Different Payment Method: Sometimes, the business traveler might not have the same credit card used for booking when they arrive at the hotel. Reasons could include:

1. Lost/expired card
2. Company policy restricting card usage for personal expenses during business travel

• The credit card authorization process allows the hotel to verify the validity of an alternative card presented by the guest. This ensures the card is functional and has enough credit to cover the stay (room rate and any incidentals).
• Typically, this idea includes the total estimated room cost of the stay and additional reimbursement for incidental expenses, such as room service, mini bar consumption function, or other on-site costs.

Incremental Holds

• The initial impression may not be enough to cover all possible payments for extended stays or expensive services. In such cases, the hotel may charge the guest’s credit card incrementally.
• These affiliates ensure that as a guest’s costs increase, there is always sufficient funds available to cover these costs due to services and amenities.

During the Stay

Additional Authorizations

• During the guest’s stay, according to the credit card authorization process, additional fees may be charged. It can be for hotel services such as dining in the hotel restaurant, booking room service, using the spa, and participating in hotel activities.
• For each new charge, the hotel processes an incremental authorization. This means that you authorize credit card for hotel payments for additional items for specific amounts of each service, allowing the guest’s existing credit to be continuously monitored.

Monitoring

• The hotel’s accounting system continuously monitors the total number of holds and authorizations on the guest’s credit card. This proactive approach helps manage the guest’s credit limit and ensures that service is not interrupted due to insufficient funds.
• If the guest approaches their credit limit, the hotel can request additional authorization or inform the guest to provide an alternative payment method.

Check-Out and Final Settlement

Final Authorization

• Upon departure, the hotel calculates all final payments due, including all room rates and other expenses incurred during the guest’s stay.
• The staff will review existing charges and increased deposits charged to the guest’s credit card, ensuring that all charges are calculated accurately.

Capturing Funds

• The hotel releases the initial pre-authorization hold, which frees up the reserved amount on the guest’s credit card.
• A final cost of all expenses is then processed, and the actual amount due is taken. This transaction removes funds from the guest’s credit card account and converts the deposit to the total amount paid.

Why Choose itilite for a Swifter Credit Card Authorization Process?

Streamline your hotel payment process with itilite virtual cards. With itilite, you can significantly reduce check-in denials and ensure a seamless booking experience.

• Reduce Check-In Denials : With itilite virtual cards, check-in denials are a thing of the past. Each booking gets its unique virtual card, ensuring your payment is always accepted and verified.
• Eliminate Form Submissions : No more tedious credit card authorization forms. Our virtual cards streamline the process, providing a seamless experience for both travelers and hotel staff.
• Simplified Reconciliation : Enjoy easy reconciliation with a one-to-one mapping of each booking to a virtual card. This precise matching simplifies your accounting and tracking, making financial management effortless.

Choose itilite for your hotel bookings and experience the convenience of secure, efficient, and reliable virtual card payments. Talk to us to know more.