By Tucker Johnson
Many guests are unaware that at check-in a hotel is just authorizing their credit or debit card, not charging them for their stay. The charge occurs at check-out and is typically done on the same card that was originally authorized and used to check-in. In the case of a credit card, the authorization is easily released; the card is then charged, and the whole transaction is very smooth. This is not the case with the use of a debit card, however.
When using a debit card, the initial authorization is also released when the card is charged. The problem occurs with the way the releases are processed. Debit card releases can take up to five business days to show as released in a guest’s bank account. The authorization reduces the amount of cash in the bank account connected to the debit card, as does the charge. This results in a guest losing access to their cash in the amount twice the size of their actual bill. This often results in overdraft fees or very low cash balances for the guest.
Hotels know they have problems with debit cards. It is such an issue that many properties put up signs at the front desk discouraging their use. This is because the use of a debit card reduces the available cash of a guest and hotels know that the authorizations take a long time to be released.
Front desk agents complain that guests don’t understand the difference between a hold and a charge. There are complaints that the bank is the true culprit by not releasing funds back into the guest’s account. Maybe instead of placing blame, or discouraging their use, hotels could put together a policy to fix the issue. There must be something that can be done.
I have a suggestion to address this problem: Don’t authorize debit cards. Treat them like cash. Charge the guest for their stay when they check-in. They think you are charging them anyway. Just authorize for incidentals. This way you still protect the hotel, but lessen the chance of a double charge hitting their bank account, which results in overdraft fees, upset guests, or both. It should not be the guest’s responsibility to understand your procedures and the quirks of debit card use. By charging the guest upfront with a debit card, a hotel could shift the responsibility to itself when it comes to the debit card issue.
Looking inward to solve problems is always the best solution. It allows you to take control and improve. I would always suggest trying to fix a problem instead of trying to explain it away with a sign at the front desk.
