Patrick van der Wardt, a peer of mine with 30 years in hospitality technology, recently checked into a hotel from a major global brand—the kind with a CISO, a compliance team, a legal department—in Cartagena, Colombia. He was handed a paper form where he was expected to write down his full card number. Expiry. CVV. Signature. A photocopy of his passport, stapled on. In 2026. In pen.
Patrick’s diagnosis of how this still happens lines up exactly with mine: nobody told them to stop. Procurement never asked. IT was never involved. The front office has always done it this way. The tools to fix it: tokenization, secure pay-by-link and card-on-file stored in a vault instead of a drawer have existed for a decade. The cost of doing it right is effectively zero.
The paper form is the PR disaster. The PCI violation is the compliance disaster. But I will address what nobody is posting screenshots of: the operational disaster.
Start with the number you can’t see
My bet is $47,538 a year. That’s what the average independent hotel is quietly losing to payments. Not paying. Losing. I’ve seen enough P&Ls across enough properties in enough countries to be confident this is within 5% of your reality.
Here’s how I got to $47,538: Take an 80-key independent at a $159 ADR, about the U.S. average, according to HotStats. Two bad-card no-shows a week is $16,536 a year. Four undefendable chargebacks a month, another $7,632. Pick three more from the list above and you’re past $47,538. The macro backs it: the Association of Certified Fraud Examiners pegs hospitality fraud at $150 billion a year, and 55% of U.S. card fraud happens in hotels (AHLA). The bet is logic and conservative math…the shape of the loss, not the decimal point.
Everyone thinks they’re losing money on their payment processing rate. But the rate on your statement is maybe the third or fourth most expensive thing about your payment setup. It’s a distraction. The real money is bleeding out in ten other places, and nobody sends you an invoice for any of them.
Here are 10 places your payments are leaking:
- An OTA guest extends their stay. The original VCC is dead. Nobody at the front desk asked for a new card. You comp three nights without knowing you’re comping them.
- You accept a credit card at booking. It has no funds behind it. The guest no-shows. You lose the room and you lose the booking you turned away.
- A chargeback hits. You can’t defend it because the evidence is scattered across three systems. The card network rules for the cardholder. You eat the full amount — not the disputed portion, the full amount.
- Your front desk agent types the wrong exp date for a card in the Incidentals folio. You are left with the Incidentals balance.
- A guest leaves with an open balance. Minibar, late checkout, a last minute breakfast charge that was posted after they walked out. You will not collect it.
- Your rate plan says 50% at booking, balance 14 days out. The automation didn’t fire, or wasn’t configured or fired against a dead card.
- A refund gets processed twice. Or against the wrong folio. Or for the wrong amount. Your night auditor catches it three days later, if at all.
- The bar runs a tab that never gets posted to the room. The server forgets. The guest forgets. You forget.
- A guest doesn’t want to give you their credit card number over the phone. You tell them to go to the website to input their info. They never do. You lose the reservation.
- A jungle adventure package: two nights, private guide, zip-line tickets, airport transfer. The deposit didn’t auto-collect. The guest no-shows. You’ve already paid the guide, locked the tour slots and dispatched the driver, so now you’re eating the room, the excursion and the seats you turned away to hold the booking.
Jot down some rough numbers for your own property. Add it up. $47,538 is conservative for an 80-room property. For a portfolio, you now understand why your cash flow never matches your revenue.
Fix the system, not the front desk
Every one of those ten failure modes traces back to what Patrick named in his post: nobody told the system to stop.
Your front desk agent isn’t losing you money. The system that asks them to juggle a reservation tool, a separate terminal, a POS that doesn’t talk to the folio, a VCC portal, a refund workflow that lives in email and a chargeback process that arrives as a PDF attachment—that system is losing you money. Your agent is just the last human who touched the transaction before it went wrong.
This is why a lower rate on a broken payments workflow is the wrong conversation entirely. It’s like renegotiating your electricity contract while the roof is off the building. Good luck.
Payments as a revenue function, not a utility
If you remember nothing else from this piece, remember this: payments are not a utility. Payments are a revenue function.
A utility is something you pay less for. A revenue function is something you invest in because it pays you back. The hotels that figured this out five years ago don’t have a payment cost problem. They have a payments upside.
FX becomes a margin line. When you can charge guests in their preferred currency at transparent rates, you’re no longer surrendering that spread to the card network. You’re capturing it.
Your booking engine converts higher. Apple Pay, Google Pay, Affirm, Klarna, local wallets…each one removes a reason for a traveler to abandon.
Mobile payments create new transaction volume. Guests who’d never pull out a card will tap a phone. On-property spend goes up.
Digital adoption kills back-door shrinkage. Less cash means less skim, less register error and less fraud that never shows up on a chargeback report.
Reconciliation stops being a job. When each payment point flows into the same folio, the night auditor is no longer a detective. That’s 10+ hours a week back to the business.
Your cash moves at the speed of your business. Instant payouts vs. 48-hour bank holds is the difference between running a business and financing one.
Every one of those compounds is invisible on a statement that only shows you a processing rate.
What to do on Monday morning
Patrick ended his post with a line I’d put on the wall of every GM office I visit: there’s no excuse left. He meant it about the paper form. I mean about all ten of the failures above.
You got into hospitality to run a hotel. The industry has spent years asking you to be a part-time payments operator and part-time compliance officer too—and charging you for the privilege.
Payments should be invisible to your guests and obvious to your P&L. Money should move when it’s supposed to, to where it’s supposed to land, without a night auditor reconciling at 2 a.m. or a guest writing a CVV in pen at check-in. That’s not a premium feature. That’s the baseline.
Rafael Blanes is chief growth officer at Cloudbeds. For more than 11 years, he has worked with thousands of independent hoteliers across more than 150 countries on the commercial operations to move their businesses forward.