Whether it’s ease of use, a sense of security, or the attraction of points and other incentives, travelers think “card is king” when it comes to booking their accommodations online.
A recent survey by PhoCusWright] found that among lodging suppliers – a group that includes vacation rentals – 68 percent of website bookings are made and pre-paid by credit card. With a predicted 98.3 million people in the U.S. booking travel plans online this year, that preference for plastic isn’t anything to sniff at.
And yet, a lot of vacation rental owners do – although not without reason. The same PhoCusWright survey found that vacation rental owners aren’t alone in their concerns about
- Credit card fraud (accounted for 1.1 percent of bookings via company websites),
- High processing fees (averaging 2.5 percent for credit card transactions), and
- The actual process involved.
As a result, a lot of owners turn away credit cards in favor of checks or money orders – neither method less likely to expose them to fraud, but perhaps easier to manage with low or non-existent fees.
But what does that choice cost their business?
“Companies may view payments as just a sleepy back-office process,” PhoCusWright noted in Payment Unsettled: Cost, Opportunity and Disruption in Travel’s Complex Payment Landscape. “But the moment the customer’s wallet is out, an effective payment system (and efficient customer experience) makes the difference between winning and losing a sale.”
Change is coming, if slowly
Earlier this year, I anticipated that online bookings will be a major trend in our industry this year. In a recent look at those predictions, Vacation Rental Marketing Blog’s Matt Landau wrote that he feels our industry has instead become polarized:
“You have a) this very antiquated market (getting smaller by the minute) of owners and managers who do bookings manually…But on the other end of the spectrum, you have b) the convenience market of online booking software, which has pretty much taken over the industry.”
Further driving that shift, the travel industry is increasingly looking to alternate payment solutions like PayPal, Alipay and Bill Me Later, as well as other digital wallet options. While the details vary, these solutions offer travelers easy ways to pay that don’t require them to share banking information and generally take little more than a few clicks.
Businesses have been reluctant to implement these alternatives for a few reasons, including
- lack of demand
- limited availability
- technical difficulties
Today, just one in ten lodging suppliers accept these alternate payment methods – but PhoCusWright found that more than 30 percent intend to implement them soon.
“E-payments help increase cash flow, improve security, and lower costs,” Sean O’Neill reported on tnooz.” But they come with their own pitfalls, such as high fees, risk of fraud, and conflict with local preferences for cash payment in emerging markets.”
There is no perfect solution when it comes to processing payments for your vacation rental. But there are a growing number of options that make it easier to balance your concerns against the preferences of your potential guests.
Have you changed your payment policies recently? Tell us about it in the comments section below.