Hotel tech groups to set virtual credit card standards
Hotel tech groups to set virtual credit card standards
11 MARCH 2020 9:41 AM

Hospitality technology organizations are working to make virtual credit cards easier and more efficient for hoteliers, their booking sources and guests.

REPORT FROM THE U.S.—A plan to standardize how hotels and their distribution channels handled virtual credit cards fell apart in recent years when different channels didn’t want to add the additional fields necessary for the use of these cards. Hospitality technology organizations have taken up this challenge again and are working on a new way to standardize and improve the process.

Years ago, HTNG was working on the Virtual Credit Card Project to add an indicator into a hotel’s booking message that the guest was using a virtual payment card for the reservation, said Sandy Angel, web services architect at HTNG.

“The virtual credit card indicator was intended to help the front desk agent know that indeed this was a virtual card and the guest checking in is not going to have the (physical) card with them,” she said. “As you know, they didn’t work.”

In order for this to fully work, everyone involved in the booking channel had to add the indicator as well as fields for what the virtual card covered, she said. While some bought into the changes, such as the Global Distribution Systems, they only agreed to the indicator alone.

The confusion over the use of virtual credit cards created friction during the check-in process, she said.

The HEDNA Payments Workgroup developed a concept called the Open Payments Alliance, in which a new payment channel that is parallel to the distribution channel would manage these business-to-business-types of payments, Angel said. The booking source and hotel work with a payment manager who handles the sharing of payment rules with the hotel and also makes sure the payment is processed based on the payment rules, she said.

HTNG has formed a joint workgroup with OpenTravel and HEDNA to develop the standards for the application program interfaces used to communicate between the different parties involved, she said. At the moment, the workgroup is finishing up the messages for communicating between the payment manager and the hotel, she said. It will then work on the APIs to communicate between the payment manager and the booking source.

The Open Payment Alliance, a HEDNA workgroup, came out with a white paper a few years ago on future best practices of hospitality payments, said Mike Carlo, founder of consulting group XanderPay and chair of Open Payment Alliance. One of the recommendations from the white paper was finding a way to make B2B payments more efficient, such as removing fax technology from the booking flow and provide opportunities for non-credit-card-based payments, he said.

The group created a concept called the payment manager, which was designed to decouple the payment information from the booking flow, he said. The booking flow has historically required a 16-digit credit card in the process, which was becoming more and more challenging with all of the different payment structures around the world.

The Open Payment Alliance then connected with HTNG and Open Travel to identify standards to help the industry insert the payment information from the payment manager into hotels’ CRS and PMS, he said.

“The second step will be getting the appropriate information in a standard formant from travel agencies, (online travel agencies), (and) other third-party booking channels,” he said.

The groups are close to publishing the first set of APIs, which will include about five different messages along with the specifications with the use cases and supporting documentation on how to use the messages, Angel said. That publication should occur in a matter of weeks, she said.

The second phase on the payment manager and booking sources will be chartered after the first phase is published, she said. That phase should be shorter, only about four to five months, because much of the work has already been completed, she said.

After the publication of the standards, HEDNA will work on adoption, Carlo said. One of the challenges with the initial virtual credit card indicator was it didn’t have an aggressive accompanying campaign for adoption, he said.

“We’re keeping the Open Payment Alliance working group intact beyond the completion of the standards in order to encourage hotels and technology companies to adopt and implement these standards,” he said.

After this, HTNG will look into the possibility of hotels using this process for its own payments, such as commissions, Angel said.

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