REPORT FROM THE U.S.—As credit card data breaches continually make the news, businesses have looked for more secure methods for transactions. Virtual payment cards, which operate similarly to traditional credit cards, have proven a reliable option. However, they also have created some headaches when the very aspects that make them safe hold up a guest trying to check in.
As the hotel industry tries to figure out different ways to solve these problems, some properties developed workarounds while others simply
wouldn’t accept payment through virtual cards. The Hotel Electronic Distribution Network Association set out to address the problem through a best practices guide. After partnering with Hotel Technology Next Generation, the two organizations published a guide made available to the public at large.
When companies started using virtual payment cards, hotel systems weren’t prepared for them, said David Sjolander, COO for HTNG. The systems at the time were designed around traditional credit cards and couldn’t differentiate between those and virtual payment cards, he said. That created problems for guests.
There’s no systematic way to communicate the rules of a virtual payment card to the hotel, he said, and hoteliers can’t identify that a set of credit card numbers actually comes from a virtual payment card. Every hotel company has a different reservation system, he said, and there are multiple forms of virtual payment cards.
“If a hotel gets a reservation with a card number, there’s no way to see if it’s a traditional or virtual card,” he said.
How they work
Virtual payment cards and physical credit cards work the same way, said Lyle Worthington, global VP of Hospitality Financial and Technology Professionals, but there are more restrictions that companies can place on the virtual numbers, making them more secure. The virtual payment card issuer generates the number through an algorithm, he said, enabling one-time use of the numbers.
The numbers can be authorized for an exact amount, Worthington said. The virtual cards also can be programmed for an exact merchant and to be used on a specific date, he said. Because of this added security, virtual payment cards are more attractive to businesses.
“If someone were to compromise the hotel and steal credit card info out of the system, they’re not able to use (a virtual card) because it was a one-time use card,” Worthington added.
He said that from a security standpoint, virtual payment cards are “significantly better” than regular credit cards, which can be stolen or used, and checks that are easy to counterfeit.
The hotel industry has done well using virtual payment cards for such business-to-business transactions as purchasing goods and services and paying contractors, Worthington said.
Source: HEDNA and HTNG
More secure and less forgiving
Because virtual payment cards are more secure, businesses want to use them for employees or contractors they either won’t or can’t issue corporate credit cards to, Sjolander said. Virtual payment cards also have grown in popularity with online travel agencies because of their security,
convenience and ease of use, he said.
A main problem relates to issues with the front-desk staff not always being able to identify a set of numbers as belonging to a virtual payment card.
“They look exactly like a credit card,” Worthington said.
If a staff member doesn’t process the number correctly, the system denies the virtual payment card, Sjolander said. It’s been a nuisance for the hotel industry for years, he said, and it’s become more of a problem as the use of virtual payment cards is becoming more prominent.
“I’ve heard about corporate travelers standing in a lobby, and the front desk can’t check them in,” he said. “Then the corporate travel manager gets called late at night because they can’t get the guest checked in.”
Jim Conway, GM of the Hampton Inn & Suites by Hilton Chicago Downtown, recalled similar issues from virtual payment cards at his hotels. For example, he said that a few years ago, a number of OTAs switched from direct billing accounts to virtual payment cards.
Although Conway said the move was beneficial because it was more secure and the hotel received its money faster, rather than having to bill out net 30 or net 35, the process was challenging. The main issue for front-desk associates was when the virtual payment cards were programmed as a one-time use for a specific amount, he said.
“If the front-desk associate made an error on the rate, posting a room rate on the charge, there was a delay to check a guest in or out of the room because they couldn’t get proper authorization on the amount,” Conway said. “They would have to call the third-party company over the phone to resolve the issue.”
Now there is a new method in place, Conway said. If a guest makes a reservation at his hotel through an OTA, the OTA is the one that makes the reservation through Hilton’s system and uses a virtual payment card. Hilton processes the payment and sends a credit directly to the property for the room.
“At our hotel, the guest is checked in with room and taxes prepaid,” Conway said. “We would ask for a secondary form of payment for any incidentals.”
Using this new method, if there is any dispute about the charge to the virtual payment card, it goes to Hilton, not his property, he said. He said the process has worked well.
Figuring it out
Choice Hotels International developed a stop-gap solution to meet short-term needs for the issue.
Tim Oldfield, VP of global sales for Choice, said the company identified the need for a recognition system for corporate travelers’ virtual credit cards to streamline the check-in process. The company created a four-digit code that identifies a number as coming from a virtual payment card.
“The code removes the hassle of a fax and allows the flexibility of our PMS to flag a booking as a virtual card for the hotel staff,” Oldfield said via email.
Faxes are a dated technology that can pose many issues to a front-desk staff, he said, and this would ensure a streamlined check-in process.
“The process has gone very well with our customers, who have expressed a greater level of satisfaction and convenience during check-in,” Oldfield said.