Payment methods for your holiday rental
The guests are coming in, but how do you want them to pay? We have a look at the pros and cons of the most popular payment methods.
October 2024
The days of cash or cheque are long gone. These days, there are so many handy payment methods available that it can make your head spin. But which is right for your holiday rental business? These handy tips can help you decide how your guests should pay.
How to charge the rent for a holiday home
First things first: there are many types of holiday rental payment methods, but one thing is paramount. Make sure you get payment upfront. Some guests may send you an email asking if they can pay in cash on arrival — or, worse, on departure. Saying yes can put you in an incredibly risky position, so it’s best to just politely decline and reiterate your chosen payment method.
Many holiday rental landlords like to use a deposit system. This means that the guest will pay a certain, non-refundable amount in advance as protection against booking cancellations. Even if you don’t collect deposits, you will need to decide on a policy about refunding cancellations. For example, some landlords will offer a refund with 24 or 48 hours’ notice, while others do not give refunds at any time. There are pros and cons to both of these policies. Whichever one you choose, make sure it is written very clearly on your website so that guests can’t miss it.
Holiday rental portal and Airbnb payment methods
If you advertise your holiday home on a holiday rental website or another online travel agency, then this platform will act as a middleman when it comes to payments. You don’t even need to worry about ways to charge for an Airbnb — your guests will pay in the manner that suits them, and the platform will pass it on to you. The pros of this method are clear:
- It can make guests feel comfortable. They may worry about being scammed if they send money to you via PayPal or your own platform. However, they will feel more secure going through a large platform.
- It minimises the risk of fraud. These days, it’s important to be vigilant, even with seemingly secure online payments. Using a trusted platform mitigates that risk.
- It allows you to use the platform’s deposit or cancellation method. This can make life easier for you, as you don’t need to worry about juggling finances.
- Guests can find many ways to pay for an Airbnb or rental, so they can choose the one that suits them. You don’t have to take control of manually setting up all these different payment methods.
However, there are also some cons to consider:
- The platform takes a commission. This means you’ll have to charge guests more than you would on your own website to get the same profit.
- Platforms may hold onto the payments for some time. You need to take this into account when you get started, or you could face a major cash flow problem.
- You may find it difficult to charge for additional services, such as laundry, mid-stay cleaning, and so on. Some platforms allow you to do this easily, while others do not.
- Guests are more likely to book without making any prior contact with you. If your rental has specific rules and regulations in place, you may have to email them after the booking to make sure they understand, which can lead to pushback.
Many holiday rental landlords happily use these platforms and portals to collect payment, but it’s always worth taking the disadvantages into account. If you’re not happy using a platform like this, then here are some alternative methods.
Payments through your own holiday rental website
Keep in mind that if you are using one of these other methods, guests may feel worried about being scammed. For this reason, it’s essential to have a very professional website and to provide reassurance where necessary. The longer you’ve been in business, and the more reviews you have, the more likely guests are to trust you; if you’re just starting out, they may be wary.
Whatever method you choose, you’ll need a system that allows you to send invoices with costs laid out clearly, including any extra charges. Don’t just send a payment request with “this is to rent my holiday home” written in it. Doing this will seem like a red flag to many potential guests.
PayPal
This is one of the most popular choices for holiday rental payments. Create a business account on PayPal, which allows you to send professional email invoices to your guests. They can choose to pay using their own PayPal balance, credit or debit card, or bank transfer. What’s more, PayPal facilitates payments in hundreds of currencies, so it’s a good choice for international guests.
One of the major pros of using PayPal is that it is a trusted payment provider used around the world for many years, so guests will feel comfortable. It also allows instant payments, which can mitigate any cash flow issues. The downside is its transaction fees, which are currently set at around 3%, depending on your chosen service plan. Make sure you keep these fees in mind when charging rent for your holiday flat.
Credit cards
Processing credit card payments manually can be a bit of a chore, but it offers an alternative to going through PayPal or a similar company. You will need to have excellent cybersecurity, or else you risk hackers committing fraud, which will not only be extremely costly but can also tarnish the name of your holiday rental business.
You’ll have to collect guests’ credit card information and charge them before their stay begins, and once again, keep processing fees in mind. Most credit card processing fees are comparable to PayPal, usually around 2 – 3%.
Bank transfers
Some international guests will be very comfortable using bank transfers, as it is a popular payment method in certain countries. However, other guests may refuse. That’s because bank transfers open them up to the risk of getting scammed, which simply does not exist with credit card or PayPal payments. Guests cannot reverse a transfer, so they may feel deeply uncomfortable with the prospect.
Bank transfer payments can be more convenient for you, as it means guests will have to take care of the administrative task of actually making the payment. However, it may take a few days to clear, especially if your guests are coming from another country.
Now you know there are lots of payment methods out there for holiday rentals. Just remember that whichever one you choose, make sure you look into the risks of fraud to keep you and your guests safe and comfortable.