How Merchant Account and Payment Gateway Work for Small Hotels?
Lifestyle changes in the past years is parallel with the rapid growth of technology. They no longer bring a handful cash on their hands. They bring cards and their gadget everywhere they go to make their online transactions at ease. Today everything is going digital. To be able to do transaction online and have a merchant account is almost a must for every modern business now. This lead to questions like “how to get a merchant account?” and “how to open a merchant account?”. And sure, you won’t hurt anybody by getting to know to do these things.
Credit and debit cards are now widely used across the world, helping the customer’s transactions faster and easier. This shifts the payment habit for businesses, including the hotel industry. They begin to provide the platform for the customer’s need in online payment process. In order to be able to transact online, there are several methods. Transactions must be processed in order for funds to be moved into the merchant account, and then transferred to the real bank account. There are several things your hotel needs in order to accept card transactions, including a merchant account and a payment gateway. These options come as a complete package for small hotels.
Understanding Merchant Accounts
Before we begin, we need to understand the basic knowledge about merchant account. If your hotel want to accept cards payment, you will need a merchant account. To simplify, merchant account is a particular bank account, provided by a merchant Acquiring Bank, that lets your business accepts card payment. After your business get the merchant status by these major banks, you soon receive a Merchant ID (MID)/Merchant Account. Your MID/Merchant Account will verify your customer’s information including their card status and identity. They will check whether the information are correct and match the stored information, for example, card number and address. Merchant account ensures more secure credit and debit card transactions. This action prevents from fraud, reports after being stolen and checks the customer’s sufficient funds within their accounts before process the payment.
How it works?
Having a merchant account will ultimately provides security for the transaction process between your business and your customers. After the transaction done, your merchant account will receive the fund. You will receive the fund in less than a week.
If you want to have MID/Merchant Account, you need a merchant account provider to connect your business account with your customer’s or guests’ account.
These merchant account providers are companies that manage credit card processing and usually through the help of an acquirer. They could be financial institutions, independent sales organizations, or double-duty acquirers, depending on the situation. Of course there will be costs including the costs for application fees, setup, monthly or annual fees or discount rate. There will also be an additional charge for every transaction they process. Sometimes, you also need to provide a sufficient deposit as the security guarantee.
Especially for hotel business where the guest can come from any part of the world, having the ability to transact with cards is essential. Your foreign guest will surely not bringing their foreign money anywhere, right? Matter of fact, this facility will also make it easier for your front office to process the payment. As the cashless lifestyle has been an integral part of our lifestyle, providing this facility will also be a good step to expand your business.
Choosing merchant account
Choosing a merchant account providers can be quite confusing. Here we will give you more insight on how to choose your future merchant account providers for your hotel. Your hotel will be required to comply with the Payment Card Industry Data Security Standards (PCI DSS) apart from the provider you use. PCI DSS is a right of ownership information security standard for organizations that handle branded credit cards from the major card including Visa, MasterCard, American Express, Discover, and JCB. Thus, you need to find merchant account provider with the criteria including a PCI Compliance Certification, an order form and an online payment gateway. PCI Compliance means that the merchant account has already fulfill the safety standards that are required for processing financial transactions online. A merchant account that is PCI compliant will ultimately have a secure server that allows you to process the payments.
You also need find a provider with a proven track record such as how long they’ve been in business, or their technical competence. For the example, having more than 15 years experience in the secure electronic payments industry, considering offers such as 100 percent money-back guarantee, and offers 30-days risk-free trial. Then, check out their customer service practices and their technical support options. Check on what does their customers have to say about them.
Understanding the Fee
One of the most important thing is learn more about their fees. You have to make sure that the fees are reasonable for your hotel. The fees are usually depend on the volume of transactions and the total amount of revenue generated. You should select a provider based on your business size and the projected growth in the future. You also need to consider the processing needs of your business when choosing a merchant account provider, whether they offer the type of processing that you require such as POS retail, mobile, online, wireless and telephone.
How to Get one?
There are various way for your hotel to get a merchant account. You can get a merchant account through a bank, but bank usually charge higher fees for businesses with a high possibility for returns and refunds. In other hand, many small accommodation providers get merchant accounts through their credit card companies. They will set up merchant account processing, request you to use a third party processor (Visa and Mastercard). Some companies also provide account that have connection with your point of sales (POS) system. This tech solution offered by IT developer provides secure credit card authorization and can be used with your POS system. The customer inputs their credit card details, which you receive manually. You need to inspect all bookings and connect them.
Secure Payment Gateway
Payment gateway is an online service that provides a secure transmission of cards information, including a fraud checks and verification of customer’s available funds and also debits the required amount of costumer’s account. Payment gateway works as the bridge between your hotel’s website (your business) and the banking systems. In the process, your customer will not interact with this payment gateway. Secure payment getaway is essential for this process because it will be the way for the information to pass through your financial networks. Then merchant account will authorize the card and receive the payment.
That is not the end of the process. The merchant account will authorize the card and receive the payment. There will be a virtual account for your funds for a short period before you receive that on your business account. You will need both a merchant account and a payment gateway to process payments online. That is why people often find these separately, and makes you pay for two lots of set-up charges, monthly charges, and, two lots of fees on every transaction. Banks will offer a payment gateway with your merchant account, and most payment gateway providers will set up a merchant account for you with an acquiring bank.