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 ¯ the nation’s 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 Heartland’s 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 E3™ (www.E3secure.com), Heartland’s 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:

APRIL: Cultivating Guest Satisfaction and Retention

Simon Hudson

According to the Oxford Dictionary an apostle is a “vigorous and pioneering advocate or supporter of a particular policy, idea, or cause”. For hotels, creating apostles should be a priority. They are the most loyal customers and they are so satisfied that they want to convert others to share their experiences. But how do hotels create apostles? This article looks at how some hotels around the world are delivering not only superior products and services, but through customization and personalization are creating guests who would not dream of staying anywhere else. READ MORE

Edward Reagoso

In the hustle and bustle of being accountable for so many facets of the hotel business, a hotel general manager needs to do one thing to truly secure his or her future in our industry, that being “insuring your team members truly care about your guests stay.” Sounds simple enough, right? This is not rocket science and I mean no disrespect to anyone struggling with operations or sales issues that can often seem surmountable. We all have these problems at one time or another. There are resolutions to every issue we have. The resolution to any problem is really just a matter of applying a specific strategy that will minimize the issue or frankly, make it go away completely. How many times have you walked into a situation with a guest that was surprised and upset that a tiny issue was never dealt with by a front desk agent, housekeeper, waiter, maintenance person, or even a manager that worked for you? I have too, the important thing is that we learn from this and move forward. One must insure everyone on our team grasps the importance of caring and the application of certain techniques can solidify a culture. Getting everyone on your team to care about your guests really is the key. READ MORE

Rick Garlick Ph.D.

A primary objective of hotel operators is to keep their properties full of ‘heads in beds’ to capacity. While this goal is understandable, there is a risk hotels may market themselves indiscriminately and draw guests that are not a good match to their particular value proposition. While this meets a short term goal of wasting as little inventory as possible, there is a longer term risk that these guests may provide negative feedback about their stays, even though the hotel was being true to its own identity and branding. Indeed, the guest experience cannot be fairly evaluated apart from the expectations and preferences a person brings to the hotel from the time he or she books a room. Using a comparative restaurant example, a top steakhouse could never deliver a satisfying experience to a committed vegetarian, even if it provided the best cut of meat and the most attentive service. You have to like steak to positively evaluate the experience. READ MORE

Aaron  Housman

Things will go wrong. It’s inevitable in life and in business. And the sooner one gets to that conclusion the sooner he can get on with what comes next: preparing for the inevitable. In the hotel business that means following up with guests when the experience is substandard for any number of reasons, from guest service to property maintenance to the type of sheets on the bed. But there is a difference between just preparing for the inevitable and being well-prepared. Following up effectively with upset guests doesn’t happen accidentally. It is planned, trained tracked and executed every day. It is a way of life for best-in-class operations. READ MORE

Coming Up In The May Online Hotel Business Review


Feature Focus
Hotel Sustainable Development: Integrating Practices for the Environment and the Bottom Line
The term “sustainable development” was first coined in 1987. In a report entitled, “Our Common Future,” the Brundtland Commission defined sustainable development as follows: “Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs.” This definition immediately caught on. In the business world, it is sometimes referred to as a triple bottom line – capturing the concept that investments are profitable, good for people and protective of the environment. Within the hotel industry, companies have taken an active role in committing themselves to addressing climate change and sustainability. Hotel operations have realized that environmentally sound practices not only help the environment, but can lead to cost reductions, business expansion, and profit growth as consumers increasingly seek environmentally sustainable products and services. In a recent survey by Deloitte, it was noted that 95% of respondents believe that the hotel industry should be undertaking “green” initiatives. Additionally, 38% of respondents said they made efforts to identify “green” hotels before traveling, and 40% said they would be willing to pay a premium for the privilege. These results suggest that consumers want and expect sustainability in their travel plans. In response to these trends, many hotel companies and on-line travel agencies have even begun offering their consumers an opportunity to purchase carbon offsets to reduce the environmental impact of their trips. The May issue of the Hotel Business Review will document how some leading hotels are integrating sustainability practices into their hotels and how their operations, consumers and the environment are profiting from them.