One of the most important changes happening with regards to online reservations is due to the European regulation PSD2. PSD2 came into effect on January 1, 2021, requiring hotels in Europe to adapt their payment process to this new regulation.
But what is PSD2 and why does it impact the hotel industry?
PSD2 is designed to make online payments more secure and better protect users. One of the key components of this legislation is the Strong Customer Authentication (SCA). SCA states that the credit card provider (VISA, Mastercard, etc.) must receive 2 out of the 3 possible forms of authentication to approve the online payment:
- Something you know - for example, the PIN code
- Something you have - for example, the card or the mobile phone
- Something you are - for example, your fingerprint
While in the past a credit card payment could be made with just one form of authentication (something you know - the credit card details), this is no longer sufficient with SCA, and the cardholder must authenticate their card with a second method at the time of payment. For the hotel industry, this can be a challenge in many situations, such as charging costs in advance or collecting cancellation fees without the presence of the customer. So, how can this be resolved and ensure that the hotelier can continue to receive payments from their customers?
The solution from Redforts Software
Redforts has developed an SCA-enabled payment gateway that allows you to ask your customers to make online payments with their credit card, PayPal, Bizum, iDeal, and almost any other form of online payment method. Payments are automatically processed by Redforts and recorded with the reservation. Customers can view the payments made and check if any further payment is required and what the deadlines are. And the best part is that this applies not ONLY to direct reservations but also to payment requests for any reservation, regardless of where it was made: on your website, over the phone, or even through a channel or OTA.