Looking to understand the different terminology catering towards hotel and payments? You’ve came to the right place. Payments can be complex when partnered with hotel software (e.g. Property Management Systems or Booking Engines). In this post, we’ll define and break down some of the most common terms related to hotelier and accommodation payments.
Term | Definition |
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3DS Secure a.k.a. Two-Factor Authentication (2fa) | 3-D Secure is a two-factor authentication (2fa) process that helps ensure that the guest is using their card, rather than a fraudster. This extra layer of security can be strong proof that the transaction was genuine. When a customer makes a payment that exceeds a certain amount, Kovena provides the technology (if the customer's bank has 2fa authorised) to send the customer a push-notification to approve the transaction. |
Acquirer | A financial institution that processes credit and debit card transactions on behalf of the card issuers. |
Chargeback / Dispute | The process of a cardholder disputing with their bank that the payment made on their card was not valid or authorised. Typical reasons why a cardholder may repudiate a payment are: 1. The product/service was not provided by the hotel as expected 2. The card was stolen and fraudulently used at a hotel 3. The hotel incorrectly processed a payment on that card 4. The cardholder wishes to renege on a payment and states (fraudulently/falsely) that the card was used without their authorisation. The card is assumed to be stolen/compromised in this scenario by the issuer. Read more below: - What is a Chargeback? - Compelling Evidence to Dispute Chargebacks: A Guide for Hotels |
Customer Not Present Payments (CNP) | Payments made where the cardholder or customer is “not present.” The payments are typically made over the phone via a virtual terminal. |
Customer Present Payments (CP) | Payments made where the cardholder or customer is face to face or at point of sale. CP payments are typically validated by either a signature or a PIN. The exception being “Tap and Go” contactless type payments. With contactless payments a floor limit of $100 is applied in Australia where all payment below floor are considered validated and therefore the merchant is still protected from Chargebacks. |
Digital Wallet | There are plenty of popular digital wallets such as Google Pay, Apple Pay, Cash App, PayPal, Venmo, etc. A digital wallet (e-wallet) can store user payment info and passwords for different types of payment methods. |
Disbursement (or Payouts) | A hotel or accommodation can choose when they’d like to have their funds disbursed into their bank account. Some hoteliers like their funds to be disbursed (or paid out) when they reach a certain amount, or prefer to have their funds disbursed on a weekly, bi-weekly, or monthly basis. Kovena is flexible and is able to work with the hotel to create the disbursement timing that the hotel prefers best. Due to the current high risk in the travel industry, Kovena only disburses funds to merchants once the service is provided (booking is complete by the customer checking-out). This is only temporary and these restrictions will be lifted as the industry is deemed to be less risky post COVID-19. By managing risk in this way, it also negates the need for Kovena to require any securitisation for a new account and reduces the need for monthly service. |
EFTPOS | EFTPOS stands for Electronic Funds Transfer Point of Sale through an EFTPOS device/pinpad. Verification of an EFTPOS payment is via a PIN (Person identification Number) only but chip to chip connection between the Card and the EFTPOS device/pinpad is planned. EFTPOS devices can also process credit card and Amex payments. |
FX Fee | Conversion between one country’s currency into another country’s currency. If you view xe.com, you’ll be able to see exactly what the mid-market rates are. Example: 1 USD = 20 MXN |
Interchange Fee | An interchange fee is a fee that is charged from a guest’s/customer’s bank and will alter depending on the type of card used. |
Know Your Customer (KYC) | The Know Your Customer (KYC) process is a necessary and mandatory verification and security measure that enables accommodations to accept payments and receive disbursements into their accounts. Read more: The Importance of Know Your Customer (KYC) and AML/CTF |
Merchant of Record (MoR) | A merchant of record (MoR) is the entity that is authorized, and held liable, by an Acquirer to process a consumer's credit and debit card transactions. This allows Kovena to bring on and onboard any hotel it sees fit to process payments through our solution. |
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