Mr. Carr

Finance & Investment

Before You Swipe That Card: Do You Know What Fees You're Paying?

By Bob Carr, Chairman & CEO, Heartland Payment Systems

Every time you swipe a guest's credit card, your hotel is charged with transaction fees. Since most of your bills are likely paid by credit card, the amount you pay in these fees are substantial. Yet, do you understand what you pay and properly manage that expense?

If you are like many hoteliers, you may not drill down into credit card processing costs - first because you may not have the time, and second because the statements you receive from your payments processor are probably very confusing. If you take a good look at your statements, you will discover that fees vary wildly based on the type of card used and can reach as high as 5% on each payment.

That may be because every transaction is passing through up to 12 middlemen, each of whom tacks on its own processing fee. Then, there are the hidden fees, penalties and questionable business policies that many card processors bury in the fine print. The end result is you may be paying more per transaction than you have to.

The Merchant Bill of Rights is a set of industry standards designed to promote fair credit and debit card processing practices. The primary objective of this advocacy initiative is to educate business owners and hoteliers like you so you can effectively manage the complexity and cost of card acceptance.

First and foremost, The Merchant Bill of Rights focuses on your right to transparent business practices. Too often, business owners pay for card processing without knowing what is really happening behind the scenes. Let's drill in to some of the transparency issues The Merchant Bill of Rights targets - starting with middlemen.

MIDDLEMAN MADNESS

A card transaction involves four entities: a bank, a card company (Visa, MasterCard, etc.), a network connection, and a processor. The processor operates the computer systems that authorize transactions and convert them into cash that is debited from the buyer's bank and credited to the seller's bank.

Surprisingly, the card processor can bring as many as 12 parties - many of whom are not necessarily needed - to the table. These can include (1) an independent contractor representing (2) a salesperson representing (3) an agent representing the bank or processor. That's just the beginning.

Then there can be (4) a referral group, (5) an accounting firm or (6) a non-processing bank. Let's not forget (7) the software company and (8) its salesperson and (9) the dealer who sold the card processing equipment.

Last up, roll in (10) the IP gateway provider, (11) its salesperson and (12) the network service provider. Had enough? Each one may be inflating the processing fee and siphoning a cut of every sale your hotel completes.

The Merchant Bill of Rights says you have a right to know how many people are involved in your payments transactions - and who they are. When more than the four required parties are involved, that's a sign you might be paying too much.

The solution is easy. Call your card processor and ask how many people are piggybacking on transactions. While some card processors will have extra parties tacking on fees, others will help you contain your costs by not involving any extra agents or contractors.

BILLING DRILL-DOWN

Are you confused by complex contracts and dense monthly statements? If so, you are not alone.

Many hoteliers struggle to make sense of what they're being charged for processing services, who is charging them and what services they need or can live without. Here are some "gotchas" to watch out for:

Every business, no matter what size, deserves to be treated fairly and honestly by business partners - especially when the cost of doing business is so high. There are scads of complexities and nuances in the card processing business, but the right processor should simplify the process, not make it more confusing. Studying up on The Merchant Bill of Rights is a great first step to leveling the playing field and gaining control of card processing fees.

Know your rights. Only then will you have the power to control costs, eliminate unnecessary charges and decide who gets a portion of your piggybank.

Bob Carr is chairman and chief executive officer of Heartland Payment Systems Į the nationís fifth largest payments processor and the official preferred provider of card processing, gift marketing, check management, payroll and tip management services for the American Hotel & Lodging Association and 38 state lodging associations. In line with Heartlandís commitment to merchant advocacy and education, Mr. Carr spearheaded The Merchant Bill of Rights (www.merchantbillofrights.org) to promote fair credit and debit card processing practices for all business owners. He has also been a driving force in the enhancement of payment card security with E3ô (www.E3secure.com), Heartlandís end-to-end encryption technology. Mr. Carr can be contacted at Bob.Carr@e-hps.com Extended Bio...

HotelExecutive.com retains the copyright to the articles published in the Hotel Business Review. Articles cannot be republished without prior written consent by HotelExecutive.com.

Receive our daily newsletter with the latest breaking news and hotel management best practices.
Hotel Business Review on Facebook
RESOURCE CENTER - SEARCH ARCHIVES
General Search:

AUGUST: Food & Beverage: Multiplicity and Diversity are Key

Larry Steinberg

The foodservice industry is one of the oldest and most important. Consumers from all demographics rely on it virtually every day for sustenance. In fact, in the U.S. alone, itís a nearly $800 billion industry thatís extremely competitive, with hundreds of new establishments popping up every year, and much of this new business is the result of increased consumer demand. Consumers want more options. For every practiced chef, there is a collective of guests eager to spend their hard-earned dollars on something exotic and different. They want to experience a bit of culture by way of their next meal, and they want to find it using the latest technology. READ MORE

Frank Sanchez

About two years ago, I started my career at the Chicago Marriott Downtown Magnificent Mile. I came from San Diego, California, the apparent capital of farmerís markets. When I moved to Chicago in late-October, the number of farmerís markets had already begun to taper off and all that was left of the hotelís rooftop garden was the sad remnants of a summer full of bounty. However, I was in for a pleasant surprise. The Chicago Marriott Downtown operates a year-round experience to create food from scratch that gives customers fresh and nutritional options. I was thrilled to join a team that can tell a customer that the very greens on their plate were grown just floors above them. READ MORE

Thomas  McKeown

To serve todayís eclectic, socially engaged and sophisticated guests, hotels and chefs need to get creative, change their thinking and push back some walls Ė sometimes literally. The fun thing about meetings hotels is that they are a different place just about every week. One week weíre hosting a bridge tournament, the next a corporate sales team, or a dentistsí conference, or sci-fi fans in costumes, or cheerleaders jumping for joy. You name the group, and our hotel has probably welcomed them. READ MORE

Elizabeth  Blau

Over the past several years, many of us have watched with excitement and interest as the fast-casual restaurant segment has continued to boom. More and more, talented chefs with fine dining pedigrees are bringing their skills, creativity, and experience to concepts built around speed, approachability, and volume. Right now, the ability to offer a gourmet experience at all price points is as compelling to restaurateurs and diners alike. READ MORE

Coming Up In The September Online Hotel Business Review




{300x250.media}
Feature Focus
Hotel Group Meetings: Blue Skies Ahead
After a decade of sacrifice and struggle, it seems that hotels and meeting planners have every reason to be optimistic about the group meeting business going forward. By every industry benchmark and measure, 2017 is shaping up to be a record year, which means more meetings in more locations for more attendees. And though no one in the industry is complaining about this rosy outlook, the strong demand is increasing competition among meeting planners across the board Ė for the most desirable locations, for the best hotels, for the most creative experiences, for the most talented chefs, and for the best technology available. Because of this robust demand, hotels are in the driverís seat and they are flexing their collective muscles. Even though over 100,000 new rooms were added last year, hotel rates are expected to rise by a minimum of 4.0%, and they are also charging fees on amenities that were often gratis in the past. In addition, hotels are offering shorter lead times on booking commitments, forcing planners to sign contracts earlier than in past years. Planners are having to work more quickly and to commit farther in advance to secure key properties. Planners are also having to meet increased attendee expectations. They no longer are content with a trade show and a few dinners; they want an experience. Planners need to find ways to create a meaningful experience to ensure that attendees walk away with an impactful memory. This kind of experiential learning can generate a deeper emotional connection, which can ultimately result in increased brand recognition, client retention, and incremental sales. The September Hotel Business Review will examine issues relevant to group business and will report on what some hotels are doing to promote this sector of their operations.