Booking.com payment options: Hybrid Payments case study

With over 1.5 million room nights booked every day at Booking.com, hosts need to familiarise themselves with Booking.com payment options and determine the best fit for their needs. In this article, we will do an overview of Booking.com's payment options from the host’s perspective and give our reasons why the hybrid online payment model could emerge as the preferred choice for the majority of vacation rental owners. 

Booking.com guest payment methods

Today at Booking.com guests can either pay through Booking.com or pay at the property directly. Also, there are online and offline payment methods to choose from.
For online payments every Partner should pass the verification with Know Your Partner (KYP) procedure. Later in the article, we will illustrate the significance of this practice through an example.

Online payments (also known as Hybrid payments)

Our point is that each property manager should enable online payments to enhance the quantity and quality of bookings.
When guests choose to pay online, Booking.com facilitates their payments using one of the methods:

• Credit, debit, and prepaid cards from Visa, Mastercard, American Express, China UnionPay, Discover, Diners, JCB, and Carte Bancaire
• PayPal
• ApplePay, GooglePay, and AliPay
• WeChat, iDeal, and Sofort.

These methods are available by default for hosts who have enabled online payments.
As an extra step, a host could integrate flexible payment solutions such as Klarna and PayPal Credit, also supported by Booking.com (you can do so on the Extranet VCC management page).

Guest payment options at Bookng.com

Pay Now option for credit cards

For partners who accept credit cards, Booking.com offers payments with virtual credit cards. When payment by cards is available for a property, guests have two options:

• Pay now: guests are charged and issued a virtual credit card (VCC), or
• Pay later: guests provide their credit card details for charging or pre-authorization based on the reservation policy.

With “Pay later” pre-authorization takes place and the credit card details get validated before check-in. The guest's credit card will be charged upon arrival.
To conceal the 'Pay later' option for card payments, hosts should review their policies. Guests can make payments at a later date in accordance with the host's policies, typically within the free cancellation period.

Cardless payment methods (PayPal, Sofort)

Accepting guests that do not have or do not want to pay with the card is easy on Bookng.com with PayPal and Sofort banking.
This feature allows hosts to tap into a broader market (by adjusting the reservation policies), while enabling guests to set search preferences to specifically find properties that do not require a credit card during the reservation process.

Booking.com guest filters for non-card reservations

At the booking stage, guests are only required to provide essential information such as their name, email, and telephone numbers.

Guest-facing card and card free booking options at Booking.com

To accommodate travellers looking for flexibility in cancellations, Booking.com offers the 'Pay now' option with PayPal as a payment method. This grants guests the assurance of booking with confidence, as they retain the option to cancel without any additional fees.

Cash payment or Pay at property/hotel on Booking.com

From 1st of March 2023 Booking.com has added a cash feature to the Guest Payment Options. The cash payment on Booking.com is selected by default for all new host accounts on the Extranet, but it is unselected for multi-property hosts.
The hosts can always modify their guest payment cash option in Property > Other policies > Guest payment options.
Cash option does not change the requirement for guests to provide their credit card details while making a reservation nor does it affect the policies previously set up.

Why choose online payments?

The Hybrid Payment system introduced by Booking.com in 2022 has been a gamechanger for many short-term rental businesses. It allows the guest to choose their preferred payment method resulting in quicker decision making and a higher conversion of enquiries to bookings.
Booking.com welcomes hosts to opt-in for online payments as this ensures bookings are 4 times less likely to be cancelled.

It creates a smoother booking process with less friction. Giving the guest multiple ways to pay for their stay and making the payment process feel like it’s on their terms and ultimately, this lends confidence and makes the decision to go ahead an easy one.

Professional hosts like hybrid payments for the money will always be there whenever they see a reservation with a virtual credit card, so there's no need to worry, even if the client doesn't show up.

Case study: Hybrid Payments to boost Booking.com’s bookings

Sanders Stay – a vacation rental management company – have tripled bookings through Booking.com in 2022 with the help of Your.Rentals by simply switching to Hybrid Payments.

Initial problem with guest payments

Sanders Stay faced a challenging dilemma when expanding their short term rental business into new regions. In Cyprus, their cancellation rate reached 2x the regional average and booking drop-offs increased.

Sanders’ existing payment system involved sending payment links via email after bookings made on Booking.com, a practice that many guests found unsettling.

Kuno de Herder, Channel Development Manager, explained, "Would you want to give your payment details to a third party when you made the booking through Booking.com? This was the issue many customers had." On top of it, guests had only 24 hours to make payments, giving them enough time to explore other options.

Introducing Hybrid Payments via Your.Rentals

In search for a smoother booking experience, Sanders Stay partnered with Your.Rentals to process payments on Booking.com.
In August 2022 Sanders Stay tested the new payment model with their Cyprus properties and witnessed a 13% growth in Booking.com conversion rates compared to other OTAs, which were expected to decline by 57% (according to Your.Rentals data).
The switch to Hybrid Payments tripled Sanders Stay's bookings, with one property seeing its cancellation rate drop from 57% to 16%.Overall, Your.Rentals reported a remarkable 50% decrease in cancellations following the implementation of the Hybrid Payment model.
Sanders Stay's adoption of Booking.com's Hybrid Payments not only decreased cancellations but also transformed their booking journey, boosting guest satisfaction and revenue in the process.
After Cyprus, Sanders Stay rolled out Hybrid Payment for Spain and then Denmark, and then they introduced it for all of their properties on a global level.

This is what our customers think about Your.Rentals

https://player.vimeo.com/video/366667794?h=aba1d25f60&dnt=1&app_id=122963&utm_source=hs_email&utm_medium=email&utm_term=yourrentals&utm_content=2&utm_campaign=Check24&gclid=EAIaIQobChMIhKrF15u76wIVUALTCh0Z6AU0EAEYASAAEgJqh_D_BwE

How did they set up Hybrid Payments at Booking.com

Setting up the Hybrid Payment model was easy because Sanders Stay had the support of Your.Rentals as its property management system partner. Your.Rentals had already done much of the development and backend work required to make the integration happen.

“We discussed the integration with Your.Rentals, who undertook all of the required development work; all we had to do was activate the model and adapt our guest messaging as we no longer had to notify them that they would receive a payment link within 24 hours, etc.”

Booking.com confirms that they are able to facilitate the switch to Hybrid Payment within one week.

FAQ

When will guest payment be taken by Booking.com?

Let’s break down the Booking.com's online payments process:

1. Guest booking

Booking.com securely receives the guest booking.

2: Virtual Credit Card (VCC)

Booking.com creates a virtual credit card for the payment and sends a notification email to the host.

3: Activation and charging

As of 2023 there are two types of Hybrid Payments setup for partners. The old (standard) payment method suggests that the card is charged after the guest check-in.
The newer method suggests that the virtual card is charged once the cancellation period is over.

Is every Booking.com host eligible for online payments?

No, to opt in for online payments a host should check each property individually if it is eligible for Payments by Booking.com.
In Extranet go to the Finance tab. If the ‘Getting paid’ option appears in the drop-down menu, the property is already active on Payments by Booking.com. If the ‘Payments by Booking.com’ option appears, the property is eligible, but not yet activated.
To activate the service, simply agree by clicking Yes. For further instructions, visit the Booking.com help section.

Linking your PayPal account to Booking.com

To link your PayPal to your Booking.com account go to: Extranet > Account > Payment Options > Add a new payment method.
Choose PayPal as your payment method and follow the prompts to link your PayPal account to Booking.com. It’s as simple as that!
Verify your PayPal account by providing your bank account details or a credit card number.

Can hosts use POS-machines to charge Booking.com guests?

Hosts can enable remote credit card charging with the help of Point-of-Sale (POS) machines. Your POS needs to be registered under the appropriate merchant category code for official accommodation providers. The payment provider typically charges around 3% for VCC usage (inquire with your bank).

If you use a channel manager for managing your property, it will easily identify bookings made through Online Payments.