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Hotel virtual card FAQs: Get the answers to your virtual payment questions!
Hotels that integrate their accounting systems with virtual cards are providing millions of travelers with quick and easy check-in and check-out service. To help you provide that kind of top-notch customer service, we have compiled some frequently asked questions for you below to help you stay on top of all your customers’ needs.
What is a virtual card and why is it important?
A virtual card is a digital credit card number specially designed for single-use payments. Virtual cards are becoming more and more popular because they offer secure, real-time payments and automated reconciliation. Even better, since they are processed as card-not-present transactions, virtual cards are accepted at all existing MasterCard and Visa terminals worldwide.
More and more travel intermediaries are opting to use virtual payments instead of traditional payment methods, such as wire, ACH, or check. Virtual cards provide a convenient and risk-free way for travel providers to secure and pay for individual travel reservations on behalf of their customers.
Virtual cards make payments simpler, smarter, and more secure! Here are some additional security features for businesses:
- Unique one-time-use card is only issued when it is necessary (for a single hotel stay, for instance),
- Has built-in controls for approving transactions,
- Prevents card from being used at non-hotel suppliers,
- Specifies the time frame for the payment to be completed,
- Eliminates the need to invoice travel companies because transactions are based on contracted rates,
- Provides faster notice of payment,
- Accepted globally through card networks like Mastercard and Visa.
How and why are virtual cards used in the travel business?
Virtual cards have been popular among corporate travel managers, travel management companies, and travel agencies since their development in the 2000s. In addition to reducing fraud, and improving reconciliation and data gathering, they allow the intermediary to become the merchant of record, providing a smoother settlement and payment flow for the customer.
Why are virtual cards so popular for hotel payments?
The nice thing about virtual cards is their flexibility. They can be used for early payments, at the time of the reservation, or at check-out. Hotels are simply required to charge the unique virtual card number (VCN) to process the transaction.
The controls allow businesses to set limits for each transaction amount. Businesses can also set the timing of the payment (at guest checkout, for example) to specific hotels or other vendors. In the payment instructions, the business manager simply specifies details like “room and tax only,” the number of nights for the guest stay, and any incidentals to be charged directly to the guest traveler. These controls are easy for businesses to use and safeguard against fraud.
Is there any virtual card preauthorization required that will slow down the process?
Under most circumstances, there is no preauthorization required. The full amount of the guest’s room and taxes will be charged according to the preset date on the card. Incidentals, on the other hand, will be paid by the guest, unless otherwise noted.
When will the hotel receive the virtual card number and is it possible to use the same VCN for more than one booking?
The card number will be sent with the booking confirmation. Each VCN is unique for the payment of one booking, whether the booking is for one person or a group traveling together.
When will the travel company’s VCN be charged?
Unless the payment instructions say otherwise, the VCN will be charged on guest checkout or at the time of reservation for prepaid cards.
Is there any reason to keep the guest’s credit card once the virtual card is logged in?
Yes, in addition to the virtual card, the guest’s credit card will always be kept on file during their stay. The credit card is typically used to pay for incidentals, unless otherwise noted, and should not be overwritten by the virtual card.
Why would the virtual card be declined?
In many cases, a charge would be declined if the virtual card was authorized at the time of check-in. If this happens, the transaction can be processed by using the pre-authorization code that was given at the time of check-in. If you did not keep a record, you can contact the travel company’s support team.
Note that your system may already store the authorization code. You can refer to your system’s reference manual for more information on how it processes authorizations and transactions.
What if the hotel does not receive the virtual card with the booking notification?
Contact the travel company’s support team for information on retrieving the number.
Can one virtual card be used for several guests in a group that check out on the same day?
When guests are part of one larger booking, then yes, one virtual card can be used. Otherwise, each guest is assigned a unique VCN.
If the virtual card is not charged when the guest checks out, how long do I have to place a charge?
The virtual card’s charging dates are preset and specified in the payment instructions.
What about guest cancellations?
Cancellations are charged to the virtual card based on the hotel’s cancellation policy.
Can the hotel charge the guest’s credit card if they run into problems?
Instead, please contact the travel company’s support team to resolve the problem, and always allow the guest to check in or check out while you are resolving the problem.
What can hotels do to ensure virtual card payments run smoothly?
- On Booking: Make sure you receive a unique account number with the booking information when a guest makes a reservation with a virtual card.
- On Arrival: Check in the guests as usual and prepare two folios:
- Guest Folio 1 (Guest Credit Card) for guest incidentals they pay directly. Be careful not to overwrite the virtual card with the guest’s credit card.
- Guest Folio 2 (Virtual Card) for net room rate and tax (and any applicable fees). If you require a pre-authorization, the virtual card may be authorized upon guest arrival. Keep the approval code and apply it when settling the charge.
To ensure successful transactions at your hotel, here are a few questions you can ask yourself:
- Are your pre-authorization and transaction settlements based on “guaranteed” type and the deposit/cancel rule associated with the reservation? This will avoid unnecessary pre-authorization declines from automated background jobs in a Property Management System (PMS).
- Are reservations set as Guarantee Credit Card (GCC) instead of Full Prepay in the PMS? This will reduce the false/positive alerts on declined authorizations.
- Are pre-authorization codes submitted with subsequent settlement transactions?
- Are two folios created – one for company charges and the other for guest incidentals? Partial Payments and/or refunds can be processed if they do not exceed the total authorized amount.
- To process a refund, are the reservations pulled up and the charges reversed? When processed through the card terminal, the refund works exactly like a credit card. The charge can be looked up through the authorization number and by choosing either refund/reverse or by entering the VCN as a negative amount. Refunds on virtual cards can be processed even if the VCN has been closed.
- Is the settlement in the property’s default currency?
Are you ready to process virtual card transactions?
Learn more about how WEX travel payment solutions can be tailored to your business, so you can accelerate and streamline operations while creating lasting growth and success for your organization.
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The information in this blog post is for educational purposes only. It is not legal or tax advice. For legal or tax advice, you should consult your own legal counsel, tax and investment advisers.
Editorial note: This article was originally published on August 21, 2023, and has been updated for this publication.