|CHICAGO (August 15, 2007) – Hotel Technology Next Generation
(HTNG) announced the formation of its newest workgroup, which will focus
on payment systems and data security for the hospitality industry.
Several leading hotel companies, payment system providers, and other companies
have already applied to participate, and other interested parties are welcome
to join the effort.
“As an industry, we need to establish a more effective way for hotels
to handle payment data efficiently and securely,” said Barry L. Shuler,
President of HTNG. “Additionally, we need to help hotels understand
and comply with increasingly complex and stringent payment card security
requirements,” said Shuler.
The new workgroup will focus not only on credit and bank cards, but
on other types of payment cards and devices, including gift cards, loyalty
cards, contactless smart cards such as Hong Kong’s ubiquitous Octopus card,
and non-card devices such as mobile phones.
“Hoteliers and technology providers from across the industry have faced
enormous challenges in this area,” said Douglas C. Rice, Executive Vice
President and Chief Executive Officer of HTNG. “We need common answers
to some very tricky questions, and once we have those, we need common solutions
to the problems so that all hotels and vendors can get the functionality
they need, provide protection for their customers’ sensitive data, and
avoid unnecessary cost and risk.”
Rice also noted that the breadth of interest in payment systems crosses
more types of technology products and services than perhaps any single
previous HTNG effort, with significant opportunities for property management
systems, point-of-sale systems, reservation systems, activity booking systems,
loyalty programs, gift card vendors, card associations, merchant processors,
merchant gateways, compliance auditing services, currency conversion services,
banks, acquirers, device manufacturers, online travel agencies, mobile
phone services, and others.
The workgroup’s deliverables will be prioritized by the members, but
are likely to include:
Because many hotel companies operate globally, and because the issues vary
significantly across world regions and specific countries, the scope of
this effort will be global. Depending on the interest of participants,
the workgroup may choose to focus on specific geographic areas or regional
issues at various points of time, or in the context of regional teams or
Definition of best practices, business processes, and technical approaches
for use and processing of payment cards in the hotel industry
Educating hoteliers and vendors on best practices and compliance requirements
for data security
Developing improved approaches to integration, including the adoption,
refinement, or (if required) development of technical standards
Defining and implementing hospitality-specific functionality
Payment systems encompass a wide range of software, hardware, and protocols
that are utilized to facilitate the electronic transfer of funds between
buyers and sellers of merchandise and services. The most common instances
of payment systems are those that support the use of credit and debit cards.
Payment systems include, but are not limited to, those operated by merchants
(typically point-of-sale devices and software), payment gateway processors,
merchant bankcard processors, credit card associations, banks, and non-bank
card issuers. They can also include systems operated by:
• Loyalty programs, in cases (for example) where loyalty
points can be redeemed online or through transactional systems for goods
For these and other reasons, payment processing for hotels, particularly
those operating globally, is perhaps best described as a bunch of disparate
systems held together by chewing gum and baling wire. It is very difficult
to provide a clean, accurate, and timely set of relevant information to
the guest, and hotels face increasing compliance costs as well as large
and increasing liability for security breaches. Every player in the process
faces high development costs and operational inefficiencies.
• Gift card issuers, including hotel brands, individual hotels,
and third parties. Hotels participate in this process as merchants, through
contracts with merchant bankcard processors, payment gateway processors,
and other parties. However, hotels have a number of unique or unusual aspects
that cause them to use payment systems quite differently from other merchants.
• Guarantees: Most hotels accept credit and debit cards to guarantee
reservations. A transaction amount may or may not be authorized, but is
in any case not actually charged unless the guest fails to show. This type
of transaction is not common among non-hotel merchants.
• Time Lapse between Authorization and Draft Capture: Hotels
typically authorize credit cards at guest check-in, in order to set appropriate
guest credit limits. The actual charge (draft capture) is not made until
later, when the guest checks out or when an intermediate folio settlement
occurs. This requires a balancing act between overauthorizing (which deprives
the guest of available credit) or underauthorizing (and risking that sufficient
credit will not be available when the guest departs).
• Reauthorizations: Hotel regularly review and resubmit authorizations
for guests approaching their credit limits. A few other merchant types
face similar issues, but few need to deal with them multiple times per
day, as may be the case for certain hotel guests. Card associations in
different regions allow different variances between authorized and settled
amounts before there is a negative impact upon interchange. Interchange
is the major underlying cost component for the acquiring bank, and can
affect merchant service fees to the hotel.
• Deposits: Hotels may accept deposits, with contractual restrictions
that govern whether and how much can be refund in the event of cancellation.
In the case of large groups, these deposits can be very large.
• Third Party Processing: In the case of both guarantees and
deposits, hotels may use agents (such as chain reservation systems) to
collect the card information and/or to debit the funds. These agents may
use different merchant accounts, or may store and forward the card information
to the individual hotel, in a transaction that occurs outside the normal
bankcard processing network but that carries card details.
• Multiple Currencies: Hotels may set their rates and collect
deposits and settlements in non-local currencies, and they may accept cards
issued by foreign banks and charge them for local currency amounts that
have been converted to the issuing bank's native currency.
• Geographic Diversity: Hotel companies may have properties
in dozens of different countries, each with its own regulations, business
practices, currency restrictions, taxation issues, payment products, and
software and service vendors. Lack of international standards makes systems
integration very costly for hotels and product vendors alike. In some parts
of the world, property management and point-of-sale systems are not integrated
with payment gateways at all, due to vendor capabilities or infrastructure,
or due to policies of acquiring banks. In these locations, standalone swipe
terminals must be used, with resulting operational inefficiencies and dual
• Regional Payment Products: There are numerous regional credit
and debit card products that have nonstandard technical requirements and
a narrow range of local or regional acquirer support. Examples of these
might include China Union Pay, Switch and Solo.
• Summary Transaction Information: Hotels must submit summary
stay information to card processors that has no counterpart with most other
merchants. The nature of the summary information required may vary by card
type and world region.
• Expense Reporting: Guests, particularly business travelers,
often use payment card data feeds to simplify expense reporting. This process
is widely implemented for airline tickets, car rental contracts, limousine
services, and other travel-related services and provides significant back-end
savings to corporate travel departments. For hotels, however, line-item
folio detail is required because reimbursable and nonreimbursable expenses,
as well as items with varying tax deductibility are intermixed on one folio.
Hotels have been working for years to provide such a data feed in order
to gain competitive edge in corporate contract negotiations.
• Inquiry Handling: Hotels frequently receive inquiries through
charge companies from guests querying an additional charge that did not
appear on their folio. While many of these charges are legitimate, it is
often more expensive for the hotel to research and justify them within
the timeframes mandated by the merchant agreement, than to simply write
off the amount in question. When they do research it, manual culling of
restaurant or room service checks from paper files may be required in order
to provide supporting evidence.
• Hotel Systems Diversity: Hotels typically operate heterogeneous
sets of systems, several of which may require access to payment systems
interfaces. These include property management, restaurant point of sale,
and retail point of sale. They may also include accounting systems, activity
systems, reservation systems,
high-speed Internet systems, video-on-demand systems, and others. In
some cases the data interfacing requirements for payment processing may
exceed the capabilities of the vendors of certain systems that could benefit
payment systems access.
• IT Skills: Because few hotel companies are able to standardize
all of these systems at every hotel, the ultimate integration must generally
be accomplished by IT staff at the individual hotels. Few hotels can provide
sufficiently skilled resources to do this, yet failure to do it can cause
the hotel to face large fines under the Payment Card Industry/Data Security
Standards (PCI/DSS) initiative.
The full charter of the workgroup can be viewed on HTNG’s website at
where HTNG members can also apply to participate. Applications are
currently in an open signup period, which will run until at least September
15, 2007. Non-members of HTNG who are interested are welcome to apply
for HTNG membership prior to that date to ensure acceptance. Once
the workgroup has held its first meeting, additional companies may be admitted
by vote of the workgroup members.
About Hotel Technology Next Generation
The premier technology solutions association in the hospitality industry,
HTNG is a self-funded, non-profit organization with members from hotel
and hospitality companies, technology vendors to hospitality, and other
industry members including consultants, media, and academic experts.
HTNG’s members participate in focused workgroups to bring to market open
solution sets addressing specific business problems. HTNG fosters
the selection and adoption of existing open standards. Where necessary,
it also develops new open standards to meet the needs of the global hospitality
Membership in HTNG is open to hotel and hospitality companies, technology
vendors to hospitality, consultants, academics, press and others.
Currently nearly 400 corporate and individual members from across this
spectrum, including most of the world’s leading hotel companies and technology
vendors, are active HTNG participants. Workgroup proceedings, drafts,
and specifications are published for all HTNG members as soon as they are
created, encouraging rapid and broad adoption. Specifications are
released to the public domain when the workgroup has completed its work,
typically after no more than 18 months. For more information, visit