Procedures for Hotels and Bed and Breakfasts: the cancellation of a pre-authorisation
Topics index
A pre-authorization chargeback can occur for a variety of reasons, but it usually occurs when the credit card holder decides to cancel the reservation or use a different payment method.
If a traveler requests a chargeback related to the payment of a hotel room reservation, for example, this information will immediately appear in the Payments section of the Owner Area.
What is preauthorization?
A preauthorization is a temporary hold on a credit card for a specific amount. It's deducted from the card's credit limit and isn't recorded, so it doesn't generate any transaction on the bank account. It simply remains in a "limbo" where the guest can't access it, and the hotelier can't collect it. It remains a guarantee until the payment is collected or released.
Generally it is a procedure used by accommodation facilities, which block a sum equal to the amount of the penalty highlighted in the cancellation policy.
[nextpage title=”When to cancel a pre-authorization?”]
At the time of payment, the customer decides whether to use the credit card left as a guarantee and therefore close the pre-authorization and the structure collects the amount. Or choose to pay differently and therefore the receptionist carries out the cancellation of the pre-authorisation. releasing the “frozen” amount.
The Hotel , as agreed with the customer, collects the full amount of the different stay and following payment, the reception staff will reverse the pre -authorization.
How to cancel a pre-authorisation?
Please note that the preauthorization lasts for a maximum of twenty-one days. After this time, the refund is automatically issued. The bank will release the amount held as a guarantee for your stay.
However, if the preauthorization is on a prepaid credit card, the preauthorized amount is not automatically refunded. Unlike traditional credit cards, the card issuing institution must perform the operation manually. Therefore, the cardholder must notify the bank of the chargeback . This will expedite the refund process.
Alternatively, the cancellation of the pre-authorization can be done manually from the reception using the pos. Just enter the data requested by the device, following the procedure directly from the pos machine. The information is all indicated on the receipt issued at the time of the pre-authorization operation carried out. At the end, the POS will issue a new receipt with the words "Pre-authorisation cancellation".
A low-cost POS that allows preauthorization? Find it here.
