Put Yourself in Your Guests' Shoes
First and foremost, remember that the renter has spent hours, possibly days, looking for the ideal destination and property to rent. By the time you are contacted, your prospective guests may feel frustrated and possibly apprehensive about remotely transferring money to someone they've never met. Presenting the renter with a set of solid and concise financial policies will help ease his/her concerns, and should also help reduce potential aggravation and problems for you.
Remember, If you use our ReservationManager Product all inquiries, quotes, agreements and payments are automated at the click of a button.
Get Everything in Writing
In order to protect both you and your renter, put everything in writing. Before the transfer of any funds occurs, send him/her a copy of your rental rules and payment policies. Have your renter print and sign these documents and send them back prior to accepting any deposits or payments. (Alternatively, you could ask them to return the signed rental agreement along with the deposit or first payment.)
Set Up Secure Payment Methods
Once your policies are in place, it is time to begin accepting payments. Here are some of the most common methods available to you today:
- ReservationManager. A simple online set-up will have you accepting rental payments in no time and some of the lowest rates available will save you money: 2.5% Visa, MasterCard, and Discover (3.75% intl. cards); 1% eCheck processing. Your property availability calendar is fully-integrated with ReservationManager and automatically updated when your guests make their first payment.
- Personal Checks. Checks are a convenient form of payment for both you and your renters. They are generally safe because they are traceable to a particular mailing address, and there are typically no fees associated with accepting checks unless the check bounces (and that signals a bigger problem.) If you choose to accept personal checks, cash them immediately, and make sure you give them ample time to clear before giving the renter access to the property, typically about two weeks. Some renters may request to pay by E-Check, which is fine. These are also called EFTs, or electronic funds transfers, and can be done through a PayPal account.
- Credit Cards. Credit cards are quickly becoming the most preferred method of payment. Travelers have simply grown to expect to use a credit card. In fact, if you do not accept credit cards, renters may look elsewhere. Accepting credit cards gives you flexibility and the benefit of immediacy, especially for last-minute bookings. No more waiting for “the check in the mail” to verify that a booking is solid. You can take deposits and final payments and even process refunds all over the Internet. Credit cards can also ease transactions with international guests and build instant credibility for your vacation rental business.
To accept credit cards through a merchant account, you'll have to complete the sign-up process and pay the appropriate monthly and/or transaction fees. But in general, you are given more protection when it comes to chargebacks.
Many owners have also considered American Express, especially for business travelers. However, there is a higher fee structure, slower pay and difficulty processing foreign currency. In the end, it may not be necessary to accept since AmEx cardholders often use other credit cards as well.
- PayPal. If you're not quite ready to set up a merchant account, PayPal is a fast and convenient online payment service. Travelers appreciate the convenience of this service, since money is transferred automatically over the Internet directly from their credit card or personal checking account. This service does require you (the owner) to open up your own account, but the travelers do not need to sign up.
Just keep in mind that you will have to pay a small fee per transaction, for both payments and refunds. PayPal also limits the dollar amount per transaction and could present a slightly greater risk for chargebacks.
- Bank-to-Bank Wire Transfers. Bank-to-bank wire transfers are commonly used by international travelers and sometimes last-minute guests. To transfer funds with a bank-to-bank wire transfer, the renter would have to contact his/her bank to request the transfer of a specified amount. The renter's bank will likely need your account number, routing number and/or SWIFT code (which can be provided by your bank) in order to send the money to the appropriate account. The renter's bank then sends a secure message to your bank, including settlement instructions.
Because of the bank involvement, this type of transfer is traceable and therefore acceptable. However, it may not be the most convenient method of payment for renters and it could take hours or several days to complete the transfer the funds, so it is probably best to also accept one of the other payment options listed above.
Avoid Risky Payment Methods
- Untraceable Wire Transfers. Unlike bank-to-bank transfers, this form of wire transfer is risky because it is basically anonymous and you really don't know where the payment is coming from. Plus, it is often exploited by thieves because the cash offices, such as Western Union, are fairly convenient.
- Money Orders and Cashiers' Checks. These are not the most convenient payment methods for your renters. The time it takes the vacationers to acquire and mail this type of payment typically causes a delay and creates additional expense for them. Plus, these payment methods are often used by scammers.
- Cash. Cash is obviously risky because if your guests mail it, anyone can find it and claim it. Or, if they want to pay you or your housekeeper in person, this will likely mean waiting for check-in to receive final payment. This could be risky in case the renter decides to cancel last minute.
Whichever payment methods you choose, make sure to outline all payment procedures in your rental agreement and provide clear deadlines. The key to simplifying the process for you and your renters is to select one or two payment options that are convenient for everyone involved
© Copyright HomeAway 2012