HOTEL PAYMENTS GLOSSARY
Making cents of hotel transactions
Welcome to your ultimate guide to hotel payment terminology! Whether you're a hotelier, revenue manager, or simply someone looking to understand hotel payments better, this glossary breaks down the jargon into bite-sized, easy-to-digest explanations.
No complicated finance talk here—just straight-up clarity.
Authorization hold
A temporary hold placed on a guest’s credit card to ensure they have enough funds for their stay. Think of it as a way of saying, “We trust you, but let’s just be sure.”
Pre-authorization on zero balance
A temporary hold placed on a guest’s card—even when their reservation is fully paid. Example: You can pre-authorize up to $300 to cover potential extras like minibar charges or accidental damage.
It’s not a charge, just a hold.
If unused? It expires automatically after checkout
Card-Not-Present (CNP) transaction
A payment made when the guest and their card aren’t physically at the hotel, like when booking online or over the phone. This one’s a favorite for scammers, so hotels use extra security measures like 3D Secure.
Chargeback
When a guest disputes a charge with their bank and gets their money back—sometimes for valid reasons, sometimes not. A real headache for hoteliers, but a well-documented case can help fight back!
Credit card guarantee
Guests provide their card details as a safety net for the hotel. If they don’t show up or cancel too late, the hotel can charge a penalty. Basically, a hotel’s insurance against no-shows.
Deposit payment
A portion of the total booking amount paid in advance to secure a reservation. It keeps bookings locked in and cash flow steady. Depending on the rate and room pricing strategy, deposits can be refundable, partially refundable, or non-refundable based on cancellation policies.
Dynamic Currency Conversion (DCC)
A service that lets international guests pay in their home currency. Sounds nice, but often comes with extra fees—so check the fine print!
Merchant account
A special bank account that allows hotels to accept card payments. No merchant account, no card payments—simple as that!
Mobile wallet
A digital payment method where guests can pay using their phone (Apple Pay, Google Pay, etc.). Fast, secure, and no need for physical cards.
No-show fee
A charge applied when a guest doesn’t show up for their booking without canceling. It helps recover lost revenue from empty rooms.
Online check-in/check-out payment
Guests settle their bill before arrival or departure, skipping the front desk. Convenience at its best!
Payment gateway
The bridge between a hotel and a payment processor. It securely handles transactions, making sure guest payments go through without a hitch.
Payment link
A secure, shareable link that lets guests pay online. Great for prepayments, deposits, or settling balances before check-out.
PCI-DSS Compliance
A fancy way of saying a hotel follows strict security rules to protect guest payment data. No compliance? Expect big fines and lost trust.
Pre-authorization
A temporary hold on funds to cover potential charges. If the guest doesn’t use it all, the rest is released back to them.
Prepayment
When guests pay upfront before their stay. Great for cash flow and reducing no-shows.
Processing fee
A small percentage charged by payment providers for handling transactions. The cost of doing business in a digital world!
Reconciliation
The not-so-fun but super-important task of matching payments with the right reservations and invoices to ensure everything balances. Mistakes here can cost big bucks.
Discover how an integrated hotel payment system can save you up to 7 hours on reconciliation—effortlessly!
Card terminal
A physical device used to process in-person card payments. Modern card terminals support tap, insert, and swipe payments, making transactions seamless and secure at the front desk, restaurant, or any hotel service point.
Explore the RoomRaccoonCardMachine - your ultimate font desk companion!
Refund
Returning money to a guest for a canceled booking or dispute. Smooth refund policies = happy guests.
Secure tokenization
A security method that replaces sensitive card details with a randomized token value, reducing fraud risks. Think of it as swapping a key for a secret code only the hotel can use.
Settlement
The final step in a transaction where funds are transferred from the guest’s bank to the hotel’s account. The sweet moment when money actually lands!
Virtual Credit Card (VCC)
A one-time-use card issued by OTAs (like Booking.com) to pay hotels for reservations. Secure, trackable, and reduces fraud risk.
Too many VCCs to track? Learn how to centralize and simplify your payments.
Virtual Wallet
A feature that stores guest payments as a deposit or credit for future reservations, refunds, or extras. Like a prepaid hotel account for frequent travelers.
Blended rate
A pricing model that combines multiple rates into one seamless charge. Think of it as a hotel buffet—you get a little bit of everything in one price, making it easier to manage revenue and guest expectations.
Interchange++ pricing
A transparent pricing model that breaks down payment processing fees into three parts: the interchange fee (charged by the guest’s bank), the card scheme fee (set by Visa/Mastercard), and the processing fee (charged by the payment provider). It gives hoteliers a clear view of costs, so no hidden surprises.
3D Secure
An extra layer of security for online card payments, requiring cardholders to verify their identity—usually via a one-time password or biometric authentication. Less fraud, more peace of mind.
💡Good to know
3D Secure payments make it harder for guests to dispute or win chargebacks, as cardholders must actively acknowledge and authorize the purchase at the time of payment.
PSD2 compliance
Short for the Payment Services Directive 2, this European regulation enhances security, transparency, and innovation in electronic payments. It enforces Strong Customer Authentication (SCA), making payments safer and reducing fraud risk.
Are hotel payments grinding your gears?
Embrace the flow with RoomRaccoon
