I do not advocate using PayPal Website Payments Standard for vacation rentals. Many vacation rental owners use this option to accept payments from their guests.
Reasons not to use PayPal Website Payments Standard for Vacation Rentals:
- No opportunity to rebill the guests credit card. A property owner can collect a deposit, but to collect the remaining balance the property owner must again send the guest an invoice. Thus the property owner becomes dependent on the guest for the timing of payments. As a property owner myself, it is much more simple to require that the customer pay the deposit via credit card. The guest credit card data is then stored at the payment gateway. When I need to rebill the credit card for the remaining balance, per the terms of my rental agreement, I just fire up the virtual terminal and rebill the credit card. This is not possible with PayPal.
- PayPal has transaction limits. The maximum amount allowed for a single transaction is $10,000 USD by a PayPal member. If you don’t have a PayPal account, you can send a maximum of $4,000 USD for a one-time, single transaction. To many vacation rental owners this is not an issue, but for others that have higher end properties or take many group reservations, there are times when that transaction limit will be exceeded.
- PayPal fees are higher than traditional merchant accounts. This is typically true if you process more than $2000.00 per month. Below $2,000 per month, PayPal will typically have lower fees because they don’t charge any monthly fees or statement fees. This of course varies depending on what sort of terms you accept for your merchant account. Merchant account pricing varies considerably from reseller to reseller. It is VERY important to shop around for the best deal. Check out this post on our forums which discusses which payment gateways we support with links to pricing and signup.
- Chargebacks. There are countless stories on the Internet when dealing with PayPal customer support. It is a nightmare. For all the money in the world, you could not pay me to be a PayPal customer. It is very very rare to get a satisfactory result from PayPal in the event of a chargeback. What is a chargeback? A chargeback is when a guest disputes a charge. The guest might dispute a cancellation fee, or even more common is for a guest to stay at your vacation rental and then return home only to request a chargeback.
If you have chosen your merchant account provider carefully, they will provide great customer service and help you understand what steps are required to dispute the chargeback. If you are using PayPal you will begin the process of pulling your hair out, because PayPal almost inevitably sides on behalf of the guest and their customer service is horrible. A great merchant account provider will work with you to have the processes in place to prevent chargebacks and if and when a chargeback does occur they will work with you to protect your interests (and your money!).
Check out the experience of this PayPal customer who rents vacation rentals:
“I am in the same love/hate situation, although it now leans heavily toward the latter. PayPal has about a month ago started holding 20% of every payment I recieve in a floating reserve for 60 days. They stated to me that it was for my protection. I have used them since 2005 and have never had a dispute, chargeback or any type of problem that would have caused them to do this. They simply started this on their own. I also do not get any interest on this held cash. I run vacation rentals and sometimes get last minute bookings. Now, I am unable to access 20% of the payments for no reason, and my guests have come and gone. As of right now, they are holding about 2K of my hard earned money.
I am now looking to change my payment processor in earnest, as I have had enough of PayPal.
Thanks for letting me vent.”
InnFirst.com has two great relationships with US merchant account providers that we use ourselves and would recommend to others because they offer low fees, no contracts, are experienced with vacation rentals and offer great customer service:
This merchant account will use the authorize.net payment gateway. Authorize.net is the largest payment gateway in the US. However, they do charge an additional $20 per month to securely store your guests credit card information. This service is called the Customer Information Manager (CIM) by authorize.net. You will have to enable it with your auth.net virtual terminal. SUBSCRIPTION TO CIM IS MANDATORY TO ACCEPT CREDIT CARDS USING THE INNFIRST.COM APPLICATION.
View Authorize.net Fees (Merchant Account & Gateway) and Online Sign-up
Quantum Gateway / CDG Commerce
To avoid the extra $20.00 a month fee that Auth.net charges to store credit cards, I would recommend signing up for a merchant account through CDG Commerce. They have the same great rates w/ no contracts, and they don’t charge for the secure storage of credit card numbers. To learn more click on the link below:
View Quantum Gateway Fees (Merchant Account & Gateway) and Online Sign-up
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