Payments are a backend process for hotels that shape the entire guest experience. A convenient payment system can mean the difference between an easy check-in and a frustrating delay – or between a completed booking and an abandoned one. Guests appreciate fast, flexible options. Hotels need to keep costs down, prevent fraud, and manage payments across multiple channels. The right approach can turn payments from a hassle into a competitive advantage.

Below, we’ll explain what businesses need to know about modern hotel payment systems – from security best practices to cost-saving strategies – and how Stripe can simplify transactions.

What’s in this article?

• What are the main types of hotel payment systems?
  
• How do hotels handle pre-authorisations and incidental holds?
  
• What are the biggest security considerations for hotel payment processing?
  
• How do hotels balance convenience and cost in payment processing?
  

What are the main types of hotel payment systems?

Hotels manage payments across multiple channels. For each channel, the payment experience should be fast, simple, and integrated with hotel operations. Here’s how hotels handle payments at every touchpoint.

Online payments

Most guests pay for their stay before they arrive at the hotel, either through the hotel’s website or through an online travel agency (OTA).

When guests book online, they enter their payment details, and a payment gateway facilitates the transaction in real time. If the card is valid and has sufficient funds, the system authorises the payment and confirms the booking. Every guest has different online payment preferences, so offering credit and debit cards, digital wallets, bank transfers, and local payment methods can boost conversions.

In-person payments

Once guests arrive at the hotel, they often make payments at check-in, checkout, or for incidental charges throughout their stay. Hotels process these transactions through point-of-sale (POS) systems, either at the front desk or with portable card readers that can accept payments anywhere on the property – such as at a poolside cabana, a VIP lounge, or a guest’s room for private services.

Guests can pay through POS systems with traditional card payments (chip-and-PIN transactions), which are still common in regions where signatures aren’t required. Or, they can pay with contactless payments, made by tapping a card, phone, or wearable device. These types of payments are becoming more and more prevalent across industries. While cash hasn’t fully disappeared, hotels must balance supporting traditional payment methods while embracing speed and efficiency.

Mobile checkouts and self-service

More hotels now offer mobile checkouts, kiosks, and self-service options that let guests pay their bills and depart without stopping at the front desk.

• Mobile checkout options: Guests receive a payment link via email or text on the day of departure. Some hotels allow checkout directly from their mobile app.

• Self-service kiosks: Kiosks are a physical alternative to mobile checkout that let guests settle their bills and get their receipts without interacting with staff.

These options can reduce front desk congestion, reduce wait times, and make the experience more convenient for guests and easier for hotel staff.

Payment system integration

Hotels using stand-alone payment systems often have to manually reconcile transactions from different sources, which can take hours each week and comes with an increased risk of errors. When a payment system integrates with a property management system (PMS), payments sync automatically with guest reservations and link every charge to the correct guest account.

For example, the hotel platform SiteMinder uses Stripe to power SiteMinder Pay, which allows hotels to accept payments across over 450 booking channels – all managed in a single dashboard.

How do hotels handle pre-authorisations and incidental holds?

If you’ve ever checked into a hotel and noticed a pending charge larger than your room rate, that’s a pre-authorisation charge. Hotels use these temporary holds to secure funds for a guest’s stay and verify that they have a valid payment method on file. This hold reduces the risk of declined payments and fraudulent bookings.

Unlike an actual charge, a pre-authorisation doesn’t withdraw money – it just reserves a portion of the guest’s credit limit. That way, when checkout arrives, the hotel knows funds are available for the stay and for any extra incidentals such as dining, spa services, or potential damages. Hotels typically estimate potential extra charges and authorise an additional amount to cover them: this could be a flat fee (e.g., £50 per night) or a percentage of the booking total. Hotels have flexibility in setting their hold amounts, but it should be enough to cover expected expenses without tying up excessive guest funds.

How pre-authorisations work in practice

• At check-in, the hotel places a hold on the guest’s card for the room rate plus a buffer for incidentals.

• The guest sees a pending charge on their account, but the funds aren’t transferred – just temporarily locked.

• At checkout, the hotel finalises the charge for the amount owed.

• If the final bill is lower than the hold, only the amount due is charged. If the total exceeds the hold, the hotel might process an additional charge.

Best practices for managing pre-authorisations

Pre-authorisations are a balancing act. Hotels need to make sure payment is available without frustrating guests. When done right, they protect the business while staying nearly invisible to the guest experience.

Here’s how hotel management can ensure that pre-authorisations serve their purpose without becoming a burden.

• Tell guests up front: Many guests don’t realise that pre-authorisations appear as pending charges. Hotels should explain that it’s a temporary hold – not an actual withdrawal. A quick mention at check-in or a printed notice can help to avoid confusion.

• Quickly release unused holds: Guests shouldn’t have to wait longer than necessary to regain access to their funds. Payment systems integrated with a PMS can automatically release holds as soon as a guest checks out for faster processing.

• Monitor authorisation expirations: Holds aren’t indefinite. If a guest stays for an extended period, staff might need to reauthorise the card to maintain coverage, as holds often expire after a week.

What are the biggest security considerations for hotel payment processing?

Hotels handle a high volume of financial transactions across multiple touchpoints, including online bookings, front desk payments, and restaurant and spa charges. Each of these touchpoints is a potential security risk if not properly protected. Fraud, chargebacks, and data breaches are all persistent threats. Here’s a closer look at how hotels are commonly targeted.

• Stolen credit cards: Fraudulent actors can use compromised cards to book expensive stays and hope to complete their trip before the bank flags the charge. A single fraudulent charge can cost a hotel thousands of dollars.

• Chargeback disputes: Even legitimate guests sometimes dispute hotel charges, especially when faced with strict cancellation policies or unexpected fees. Some do this intentionally (known as friendly fraud), which forces hotels to prove the charges were valid or risk losing the money.

• Data breaches: Data breaches can expose all your guests’ payment details. These breaches can happen due to technical failures or mistakes, such as storing card numbers in an unsecured spreadsheet or accepting payment details over email.

The best defence is a multi-layered fraud prevention system that verifies transactions before they become a problem:

• Using tools such as address verification service (AVS) and 3D Secure can help prevent fraudulent online booking.

• Checking IDs at check-in can prevent stolen card use for in-person transactions.

• Storing tokenised payment details (rather than the card numbers) for repeat guests can prevent unauthorised use.

• Leveraging fraud detection tools can go further than manual checks alone. Stripe Radar, for example, analyses billions of global transactions each year to flag suspicious payments in real time.

Hotels that accept card payments must also follow the Payment Card Industry Data Security Standard (PCI DSS) to protect payment data. That entails the following:

• Point-to-point encryption (P2PE): Encrypting card data both in transit and at rest, so that it’s unreadable even if intercepted.

• Access controls: Limiting which employees can see payment data. Only finance or authorised staff should have access, and even then, controls should log and restrict their usage.

• Secure integrations: Many hotels rely on multiple third-party systems (e.g., PMS, booking engines, channel managers). Every system that touches payment data must be properly secured.

Many hotels choose to use payment providers that handle PCI DSS compliance for them, so they don’t have to handle the entire burden themselves. Stripe, for example, is PCI Level 1 certified.

How do hotels balance convenience and cost in payment processing?

An easy payment process can drive bookings, increase on-site spending, and improve guest satisfaction. But every transaction carries a cost, and even small fees add up. Here’s how hotels can optimise the payment process to benefit their guests and their bottom line.

Be strategic with payment methods

Hotels should consider including the following payment methods to boost conversions and increase revenue:

• Buy now, pay later (BNPL): This option can increase transaction value by allowing travellers to pay in instalments.

• Apple Pay, Google Pay, and Link: These options can help reduce friction. If a guest struggles to enter card details on a hotel’s website, they might abandon the booking. Link, Stripe’s accelerated checkout, auto-fills a customer’s saved payment information for faster checkout.

• Local payment methods: Guests might feel more comfortable paying with familiar payment methods and in their own currency whenever possible. A European traveller booking a stay in Asia, for example, might feel more comfortable seeing charges in euros and paying via a European BNPL provider.

Stripe enables hotels to accept dozens of local payment methods worldwide. This flexibility expands access to global travellers without additional work for hotel staff.

Design the payment process for convenience

When payments are easy and convenient, guests often book faster, spend more, and return more frequently. To accommodate impulse purchases, from spa treatments to late checkouts, make it as easy as possible for a guest to charge services to a stored card or mobile app. Self-service and automation through mobile check-in and checkout can boost convenience and reduce labour costs as an added bonus.

Manage processing costs

Credit card processing fees vary based on factors such as card type, transaction volume, and region. Optimising for cost efficiency without compromising guest convenience requires strategic choices:

• Understand pricing models: Some processors offer flat-rate pricing, while others use an interchange-plus model. Hotels processing large volumes might be able to negotiate better rates.

• Avoid hidden fees: Legacy processors sometimes add on batch fees or PCI compliance fees. Stripe has transparent, per-transaction pricing that includes comprehensive security.

• Offset costs if possible: Some hotels explore cost-offsetting strategies. This could mean offering discounts for lower-cost payment methods, such as bank transfers, or implementing small card surcharges. However, be cautious with these strategies; hidden fees can frustrate guests, and in some regions, surcharges are restricted.