Credit card authorizations are needed when the cardholder is different from the guest who'll be on property. Collecting card information ahead of a guest's stay via email, phone, or fax is risky, and it’s easy for fraudsters to take advantage of your authorization process if you don’t set it up properly. Our guide can help you optimize your workflow to reduce the burden of fraud and chargebacks.
A credit card authorization form allows hotels to obtain credit card information from a cardholder before a guests’ stay and later process it when the card is not in the hotel’s physical possession at the time of the charge.
The cardholder fills out and signs the form indicating the parameters for card usage, including terms like:
Once the terms of how the card can be used are defined and signed off on by the cardholder, the form acts as a hotel’s permission slip for when and how they can charge the card on behalf of the guest. At the end of the stay, both the guest and cardholder receive a final bill that line-items all the authorized charges the hotel made during the visit.
To maintain PCI compliance, businesses are encouraged to use secure methods for handling credit card information, such as encrypted online payment gateways or tokenization systems. These methods reduce the risk of unauthorized access, data breaches, and non-compliance with PCI DSS requirements.
PCI compliance isn't a new topic, but it's important to stay sharp in light of post-pandemic fraud increases. How much do you know about PCI and your risks? Take our quiz to find out!
Authorization forms are helpful when the cardholder is different from the guest and will not be on property to pay. One example hotels see regularly is when a business traveler’s trip is paid for by their employer. The authorization form can be filled out by a company representative, allowing the guest to make payments without the card present.
Authorization forms also make it more convenient for guests to make incidental purchases for items like parking, food and beverage, and entertainment. Whether they are staying at the hotel or utilizing a hotel’s event space, the authorization form allows guests to pay for services and amenities without needing to swipe their card each time.
To make your process faster and more secure, we’ve created a few free templates for you to personalize and offer guests.
A credit card authorization form is used to obtain permission from a cardholder to charge their credit card for goods or services. This form is typically used in situations where the cardholder is not physically present. Once the cardholder completes and signs the credit card authorization form, the hotel can process the payment using the provided credit card information.
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A group credit card authorization form is used in situations where multiple individuals within a group are collectively responsible for charges made on a single credit card. This form is commonly used for group bookings, events, or travel arrangements. By completing and signing the group credit card authorization form, the group representative and credit card holder give consent for charges to be made on the specified credit card for the group's expenses.
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A credit card authorization form is used to obtain permission from a cardholder to charge their credit card for goods or services related to an event. This form is typically used in situations where the cardholder is not physically present. Once the cardholder completes and signs the credit card authorization form, the business coordinating the event can process the payment using the provided credit card information.
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When using an authorization form, it's important to capture specific details to protect both you and your guest. You can also use this information to spot a potential fraudster at work.
How guest information is filled out on an authorization form can reveal several clues to whether the information is legitimate and provided by the true cardholder, reducing the risk of fraud and chargebacks.
Details to Reference:
Fraudulent Traits to Look For & Steps You Can Take:
Fraudsters like to act quickly (up to 48 hours prior to check-in), so many hotels have adopted a policy to not accept same-day reservations. While that may not be an option, here are some best practices to follow if you can adopt it:
Details to Reference:
Fraudulent Traits to Look For & Steps You Can Take:
Cardholders can use authorization forms to indicate the services and amenities the hotel is authorized to charge their card for. This portion of the form helps hotels protect themselves from friendly fraud since there is a record of approval to make certain transactions.
Details to Reference:
Fraudulent Traits to Look For & Steps You Can Take:
By requesting that a credit card authorization form is fully filled out and signed by a cardholder before the guest’s stay, hotels can protect themselves from chargebacks post-stay.
To allow a hotel to charge their card, cardholders must provide their payment details within an authorization form. Hotels can also reference this information when trying to prove a card’s validity. The payment information recorded on an authorization form is sensitive and must be handled in a PCI-compliant manner to prevent cardholder details from being stolen.
Details to Reference:
Fraudulent Traits to Look For & Steps You Can Take:
In the tradition of paper forms, sensitive cardholder details are at risk. Paper forms can easily be misplaced or even stolen, and having the best intentions, like storing files in locked cabinets, can waste time and even backfire.
Using a digital solution like Sertifi, hotel staff can keep information safe using encryption, password protection, specialized links, and other built-in protections. You can also take advantage of automatic ways of flagging a card’s validity by instantly verifying card-related information, e.g., by completing an automatic AVS check.
Cardholders are meant to provide a signature along with the date the form was signed, indicating their consent to authorize charges to the credit card for the specified amount. Without a signature, the form cannot be activated or work as a legal document.
Details to Reference:
Fraudulent Traits to Look For & Steps You Can Take:
If the signature on an auth form does not match the cardholder name, then it might be worth looking into, as this could be a sign of fraud. If the date is the same day as check-in, consider declining the business, as fraudsters prefer to act within 48 hours of check-in.
FRONT DESK HELP
Keep this guide handy at your front desk, as it highlights the primary areas to check for fraud.
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With a rise in ecommerce transactions, combined with the growing threat of fraud in card-not-present (CNP) transactions, it’s more important than ever to get proactive and creative about fraud prevention.
If you haven’t yet incorporated AI into your fraud detection system, it may be time to consider it as a replacement for inefficient, error-prone processes that are probably resulting in too many chargebacks and costing you too much of your revenue.
For example, behind the scenes of Sertifi’s authorization solution are Kount’s fraud detection tools, which alert you to a potentially risky card before a guest’s arrival. As a merchant doing business online, it’s a great way to increase confidence that you’re accepting guests and cards you can trust, while maintaining a great customer experience and expanding your business with fewer chargebacks.
Machine learning is an extension of AI that uses mathematical models of data to train a computer to make decisions without human input. In the case of detecting credit card fraud, computers analyze and learn from credit card data to make educated decisions about fraudulent activity.
Here’s how it works with the Sertifi / Kount integration:
Transactions receive D and F ratings only when there are serious indicators of risk. For example, the card will be declined if the system detects hundreds of bookings being placed from a single location/IP address, a warning sign that card testing fraud may be at play. For hotels, this means the fraudster books several rooms, and if they go through, they know they can use the card for additional purchases or sell it to another fraudster. If rooms are booked with no intent of keeping the stay, you miss revenue from the room and the card processing costs, plus real guests may be negatively impacted by very limited room options being available.
Using the score and reasoning, you can decide whether to move forward with a card or not, leaving the ultimate decision-making in your hands. Businesses have different levels of risk they’re willing to take on, so the fraud scoring is only intended to supplement your decision-making. For example, the system will flag a same-day check-in or if the card is being used in a different location than the guest. There may be perfectly safe and reasonable explanations for these scenarios, so even when a card is flagged as risky, we always recommend following up with the person who submitted it and seeing if it’s legitimate business you can generate revenue from.
Because unsupervised machine learning focuses on short-term linkages and patterns, it catches emerging fraud attacks and anomalies that supervised machine learning cannot yet learn about due to the recentness of unseen attack types. Unsupervised learning is also much faster and more accurate than human judgement alone.
Yes, machine learning in fraud prevention systems can help reduce your chargeback rate – but keep in mind not all chargebacks are the same. Machine learning engines are trained to detect suspicious activity and help you reduce criminal-related chargebacks; however, not all chargebacks are due to legitimate fraud. Maybe your guest decided to initiate a chargeback instead of a refund for a legitimate transaction or genuinely forgot about a purchase they made from you. Machine learning would not prevent those types of chargebacks, though there are other steps you can take in these cases.
The biggest benefit is you’re replacing overly manual, error-prone processes with automation – without even losing any control. This makes it much easier to stay ahead of fraudsters and make data-driven, accurate decisions about who to trust. When you’re able to stop a fraudster early, you won’t see a chargeback eventually pop up, saving your revenue and your staff a significant amount of time.
In the end, machine learning is only as powerful as the data, support, and technology around it. That’s why Sertifi partners with Kount, a global leader that helps businesses stay ahead of evolving threats, seamlessly automate inefficient processes, and proactively protect revenue.
Get a sneak peek at Sertifi's AI-powered fraud detection tools and how you can use card scoring to reduce chargebacks.