Hotels and Short-Term Rentals: Authorizations and Incidentals

Check-in: the estimated authorization

Visa's rules let a merchant send an estimated authorization when the final amount is not known. The merchant must make it a genuine estimate of what the cardholder will spend, tell the cardholder the estimated amount and that further authorizations may follow, include the estimated authorization indicator, and leave out any amount for potential damage, theft, other delayed charges, insurance premiums or tips. Visa's processing timeframe table lists 30 calendar days for transactions with an estimated authorization indicator at lodging merchants.

When the bill grows: incremental authorizations

Visa allows an incremental authorization only after an approved estimated authorization, when the original estimate no longer covers the revised or final amount. It must use the incremental authorization indicator and the same transaction identifier as the original, must not include damage, theft or insurance amounts, and does not extend the processing timeframe.

Check-out: release what you did not use

Unused holds tie up a guest's available credit. Visa requires an authorization reversal within 24 hours of completing the transaction when the final amount is less than the total authorized, for the difference. If the transaction is never completed, the reversal is due within 24 hours of the cancellation or of the end of the approval's validity period, whichever is earlier. Illustrative example only, with made-up round numbers and taxes ignored: a guest books three nights at $200, so the hotel authorizes $600. The guest leaves after two nights and the final bill is $400. Under Visa's rule the hotel reverses the remaining $200 within 24 hours of check-out.

Guaranteed reservations and no-shows

Visa's rules for guaranteed reservations require you to disclose the reservation conditions when the booking is made, and to send a written confirmation within 24 hours for phone bookings. The guest must have at least 24 hours after receiving the confirmation to cancel without penalty. You must hold the room for at least 24 hours after the agreed start time unless the guest cancels under your policy, and if you fail to hold it you must provide comparable accommodation at no cost. You may process a no-show transaction only if the guest did not properly cancel and did not claim the reservation. The receipt must show the daily room rate, taxes, the agreed start date and the words "No Show". Visa's dispute rules let an issuer dispute a no-show where the guest properly cancelled or where the merchant billed more than one day.

Advance deposits

An advance deposit takes the full or partial payment before arrival. Visa lets travel and entertainment merchants take advance payments, and its stored-credential and advance payment table requires the cardholder's express informed consent to terms that include the cancellation and refund policy and the date cancellation rights expire.

Charges after check-out

Visa lists lodging merchants among those that may process amended amounts and delayed charges. A delayed charge for loss, theft or damage must be directly related to the stay and must be the actual repair or replacement cost or the insurance deductible, whichever is less, and an advance payment must not be used to pay for damage. Visa's rules list documentation the merchant must provide, so ask your acquirer what it needs before you bill. Keep the check-out folio, photos and your disclosed policy together in case the guest disputes the charge.

The advertised price is a separate rule

The card network rules above govern authorizations. The FTC's Rule on Unfair or Deceptive Fees governs price display for short-term lodging, including hotels, motels, vacation rentals and home shares offered through platforms. FTC staff guidance says mandatory fees, such as a required resort fee, belong in the total price shown upfront, while fees incurred after purchase, such as charges for damage to a hotel room, may be left out. If guests must pay by credit card, a card fee is mandatory and belongs in the total price too. Our FTC fee rule guide covers the detail.