The Pros and Cons of Accepting Credit Cards at a Bed and Breakfast

If you read Think “easy” when starting your bed and breakfast, then you know that making it easy for the guest is what it is all about.

Accepting credit cards is a necessary part of running a Bed and Breakfast business, because it is convenient for the customer.  Like anything in life, there are good and bad points – here they are as I see them.

Ease of payment for guests

Even if guests only stay one night, most people no longer carry enough cash to be able to pay cash for their stay without pre-planning.  In addition, many credit cards have benefits attached to them that encourages people to use them – think cash back, travel points, etc.

Fewer trips to the bank for B&B owner

Owners don’t want to leave cash and cheques lying around your B&B and you need the money in the bank for cash flow purposes – you have bills to pay with that money.  Most credit card companies deposit the money into your account within 48 hours (unless it is a weekend or holiday)

Ability to collect money for deposits, gift certificates without the buyer being physically present

Unlike retail sales where the customer is always present in a bricks and mortar business, that is not always the case for a B&B owner.  Depending on the company you choose to handle your on-line reservations, the deposit or payment might be taken at the time the customer makes the booking, or you might process it manually, after the fact.  Either way, you are able to collect monies without the customer being present.

Cost to B&B owner

Fees for processing credits range between 2 – 5% per transaction, depending on credit card type, the type of transaction (i.e. is the guest there or are you processing transactions virtually), and your volume of business.

Potential for fraud

When the card is not present there is a greater opportunity for fraud to occur.  If you are not swiping an EMV (chip enabled card) B&B owners are now liable for all costs associated with the transaction.

Dealing with chargebacks, disputes and refunds

A chargeback occurs when the card owner claims the charge is not theirs and the B&B owner is charged back the amount of the original charge.  Disputes (and chargebacks) often occur when the guest cancels and is charged the cancellation fee and they think they should not have to pay it.  B&B owners are required to prove that the cancellation fee is part of the agreement they had with the guest (and that the guest agreed to those terms) by providing copies of policies on the web site, e-mails to the guest stating the policy, etc.  Unfortunately, most credit card companies rule in favour of the card owner.  There is a monetary charge for chargebacks, disputes and refunds.

Rapid changes are occurring in the industry

From items like being PCI compliant (ensuring safe storage of credit card and personal information) to virtual terminals replacing point-of-sale terminals, things in the credit card industry are changing quickly.  Having a good relationship with your account representative at the credit card processing company is a good first step to ensuring you can stay on top of everything and ensure your guests leave your B&B with fond memories only!

Will you be accepting credit cards at your bed and breakfast?  Do you have questions about processing credit cards?  Drop me a line and let me know!

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