Accepting Payments For Guest Stays - Let The Money Roll In!
Updated: Jan 23
The fun stuff :)
We discussed taking payments in the deposits post. Essentially you would be doing the same thing. You can request payments to be made using PayPal, Stripe or any other payment processor you feel comfortable with, so long as there are various payment options available which most payment processors employ.
Accepting Cash Payments
In this business you may be tempted to accept cash payments quite often to appease your guests and yourselves.
Cash is typically offered to hosts and vice versa to alleviate charging taxes and extra associated fees. Is it a good idea though? In this post we are simply giving our opinion to you on this topic. If you want to run a clean business then avoiding cash payments completely is the best way to go. Reporting your income is important. You don’t ever want to get into sticky situations with the government as a business owner. We’ve heard many horror stories and for what it’s worth, cash as tempting as it is should be avoided. You also want to be able to build on your livelihood and have credit. If you’re reporting low income because you do more cash then the opposite really doesn’t serve the purpose of building credit. Again, this is completely your call as an Airbnb Host/Owner/Operator and our take on this is to avoid the cash transactions and run everything through your business accounts. There are so many things you can write off in this business so why not play by the book :)
Taking Full Payment Well In Advance
When Toronto Escape Property Management started, we met all of our guests at our office and took payment on arrival. This required us to be stationed at our office often and limited our abilities to focus on other vital aspects of our business.
The other difficulty we encountered were guests not showing up even though they have paid their deposit. We realized that we are certainly not in the business of generating revenue through deposit retention so we changed up our process.
For the last five years our guests are required to pay in full upon the time of booking or shortly thereafter. A deposit is requested and a payment request for the rental amount is requested after that. Some guests will have their reservations about this process as hotels don’t do this. We remind guests that we are not a hotel operation and in order for us to continue to run successfully, we require payments in full. This resonates well with potential guests. This process also weeds out those that book with the intention of cancelling.
Cancellations can certainly put pressure on you as now you are stuck with open dates that need to be filled. The vacation rental market does have high demand but you can’t dismiss the fact that cancellations will inevitably cause a disruption in your business. We understand that guests want to shop around and this is why reviews are also a vital part of your business. When guests see a lot of great reviews, the hesitation to book is diminished.
If you receive bookings through Airbnb then you need not worry about payments as that is collected through the Airbnb platform immediately upon booking by Airbnb. Airbnb will pay you out via PayPal a day or two after your guest has arrived without fail (typically). We have never received any late payments. If there is an issue with the payment, Airbnb will absorb the hit. Airbnb has done an excellent job with payment verification so there are never any hassles for hosts.
Booking.com and Expedia Payments
Booking.com and Expedia are avenues that allow direct bookings. There are no inquires from guests. A guest will either see your unit and book or pass and continue shopping online. You will receive a notification from booking.com and Expedia indicating that your property has received a reservation and from there you can begin your process and issue payment requests.
If you are going to charge taxes then you most definitely will have to register a business to do so. Inquire within your jurisdiction what the tax rate is that you should be imposing on your guests.
Service Fees, Should You Charge Them Or Not?
If Stripe or PayPal is your processor of choice then be advised that there is a cost associated with using their services. Wave will charge you 3% and PayPal charges 2.5% of the transaction. This can add up and the intent in business is to lower your expenses where you can. We apply a service fee of 4% to our guests for processing and receive very few complaints. You can choose to do the same or even limit the fee you charge to exact same amount your processor of choice charges.