Did you know that the vast majority of short term rental owners pay the 15%-30% of their nightly rates as commission to Online Travel Agencies and property listing sites? Even so, to win the competition in the over-saturated market of OTAs, you have to pay a larger portion of your revenue to appear as special listings and drive enquiries and bookings. Although using OTAs and property listing sites is a good starting point for property owners starting out to rent out their spaces as short term rentals, at a certain point, such third-party resellers will take away a considerable amount of vacation rental owners’ net profit in the form of commissions. Direct bookings are what any short term rental owner craves and plans for. However, direct bookings come with more responsibilities alongside the promising increase in revenue. There are many inherent challenges like collecting payments for direct bookings. So, how should you take payments for direct bookings?
How to Deal with Fraud and Chargebacks?
Online payments can incur chargeback and fraud losses which have to be considered managing payments for direct bookings. There are two types of chargebacks: “Non-fraudulent” and “Fraudulent”. Non-fraudulent chargebacks happen if a guest is dissatisfied with their stay at your vacation rental, thus asking for a refund. These are also known as “Services Not Provided” chargebacks. There is little you can do to prevent this type of chargeback, other than ensure that you do your best to keep your guests happy. If you have digitised door entry systems with a unique code for the guest, logs showing that the guest accessed the property using that code may help. Alternatively, written communication mentioning that they entered the property and are happy with their stay could be used as proof of a service provided.
Fraudulent chargebacks occur when a guest claims fraud because of a stolen credit card or data, and ultimately asks for a refund. No matter what the reason or the case is, as a vacation rental owner, you have to pay the refund, with the ultimate result being loss of money, unless you can show that the card owner consented to the transaction.
In order to prevent chargebacks, you need to prepare yourselves in advance.
- Be clear about your cancellation and refund policy.
- Check the legitimacy of the guests and ask for IDs.
- Get your terms and conditions signed.
- Upload proper photos and clear descriptions for all your listings.
- Use chip and PIN methods on arrival. However, it requires manual transactions and a lot of paperwork to manage the payments and refunds.
- Alternatively, use 3D-secure ‘payment’ links. Verification of the card is required from the guest. security deposit pre-authorisation expires after 7 days though.
Zeevou has foreseen all these risks and has made a working solution: Zeevou’s signature 5-Step Booking Confirmation Process. Zeevou helps you capture all the data you need and take care of all booking-related issues. It can mitigate fraud and chargeback risks. With Zeevou Book, you receive confirmation of guests’ info and the card they wish to pay the security deposit. You can also automate the sending of an email through Signable (a legally binding digital signing software) to guests. By Signable you will ask them to sign your terms and conditions and upload any IDs as requested. Moreover, you can collect ID through Signable in a GDPR compliant way.
How to Send Invoices to Guests?
Direct booking does not have to imply increasing your workload. Just Imagine sending invoices to every single guest . Wouldn’t that be a waste of your precious time? Zeevou’s 5-Step Booking Confirmation Process allows guests to download the invoice at the point of payment. In turn it helps save admin time. Zeevou provides you with a nicely designed invoice labelled with your logo, brand colour, and slogan.
How to Manage Security Deposits?
In some cases, a host may ask the guest to transfer funds or take cash. Alternatively, they may charge their card, and pay this back to the guest at the end of the stay. At other times though, they will keep a security deposit as a pre-authorisation from a guest’s card, similar to what happens when you rent a car. The issue with the former approach is that it involves manual transactions and a lot of paperwork to manage the payments and refunds. This takes time and sure comes at a cost.
There is a way of overcoming the risk of a guest providing you the details of a stolen card. It is using 3D-secure ‘payment’ links. By doing so, a host can require a guest to verify that they are the card holder. There is a problem with 3-D Secure links that companies such as Stripe or Worldpay provide. The problem is that the security deposit pre-authorisation expires after 7 days. A system is needed that allows hosts to specify a custom timeline as to when a security deposit should be pre-authorised from card details entered by a guest using a 3-D Secure link. Moreover, the system would need to hold on to the security deposit until after the guests’ departure. For how long? Well, it would be great if the host could specify for each unit type how long that window should be.
Zeevou’s renowned 5-step Booking Confirmation Process is the only system that offers hosts the necessary automation to manage security deposits effectively. Moreover, if there is a need to capture part of the deposit, Zeevou allows hosts to collect payment without having to leave the system. Charging a deposit creates a log of the reason and the amount in Zeevou, and also allows the host to automate the sending of an email and/or text message to the guest, detailing the charge. If you are interested in the ways Zeevou helps you automate security deposit pre-authorisation and release in more detail, please read How to Automate Security Deposit. To find out more about Zeevou and how it helps you collect payment, book a demo at zeevou.com.