Anthony Donohue is the Senior Director of Product & Delivery – Shiji Payment Solutions at Shiji Group. Prior to this role, he accumulated over 20 years of experience in banking and tech, mostly focusing on software market development and project management and support. In this editorial, he offers his insights on hotel payment technology and the payment industry landscape, what exactly goes into integrating payments with the rest of a hotel’s tech stack, and how that leads to an improved customer experience.
A Jungle Of Integrations
Back when business systems began going digital, tech providers responded by developing their own applications and product ecosystems. Each of those businesses had to build from scratch, certify, and maintain its own credit card integrations. This meant that hotel payment technology and payment technology options, in general, were, in reality, very finite. The way credit card integrations were built for each of these products were all different with virtually no overlap in compatibiity. If any tools existed in the same country, they were from different vendors, so as an end user, you’d have to get credit card processing with vendor A, then sign an agreement with vendor B and even vendor C, making it extremely inconvenient. Additionally, many of these integrations had regional or local requirements. For example, a core POS application developer in the US doesn’t exactly concern itself with how debit card processing is handled in Canada, and so on.
In the above, our team at Shiji saw a need to build out our own specific internal integration points to have a consistent approach across our hotel payment technology. Instead of developing something only for a particular product, we make sure our products can check all of the boxes to be able to support all relevant industry functions, such as restaurant and retail workflows, e-commerce, membership functions, and so on. In addition to that, we studied a pain point that companies worldwide struggle with, which is using the cloud to connect to on-premise infrastructure, and managed to figure it out and take our solution live in a number of countries. We have built the central nervous system needed to enable a cloud-first approach that integrates with companies’ systems, such as cloud connectivity to cash recording machines in Japan, to credit card terminals in Germany, the United Kingdom, and the United States.
Improved Security and Guest Experiences
So how do we use the above innovations to benefit hospitality operations? In the hotel space, multinational organizations have dozens or even hundreds of properties across the globe, but payment processing is always very local. Management groups generally control the IT standards while property owners tend to decide matters at the market level. Coupled with the local and regional practices of each country, having a standard for tasks such as credit card processing becomes a challenge.
After all, this is 2022– If I can stream a movie or show on my phone, why do I still need to use a serial cable for credit card integration in a hotel?
Take the issue with one of the more widely used protocols for safe credit card handling, tokenization– a secure way to store credit card information by replacing its number with a surrogate value known as a token. A credit card tokenized in one country can’t necessarily be used in another as the banks are not and never will be the same. When a property in the US uses a token service provider to secure a credit card, and this reservation is sent to a property in, say, China, that token will not be usable as the map to decodify it is not the same. A way to work around that limitation is needed, and at Shiji we built what’s called a token vault for the major hospitality service providers around the globe. It takes the original token and converts and stores it so that other properties within the same hotel chain can make use of it, while still keeping the security of the sensitive data, the hotels’ environments, and ensuring PCI standards are met.
On a different but equally challenging note, integrating payments with a Property Management System also has its obstacles due to its myriad of workflows that need to be catered to. As an example, a reservation received through an OTA will typically contain a credit card number, and that raw sensitive data shouldn’t be sent directly to the property, therefore this information gets tokenized prior to hitting the enterprise platform and makes it possible to process tasks such as a pre-arrival deposit charge right then and there. This technology also allows, say, for guests to fill out pre-arrival registration forms via online channels complete with credit card information that will be kept securely and properly sent into the PMS, making the guest’s arrival experience on property much more efficient and pleasant. This changes the touchpoint where guests are asked for payment information and empowers hotel staff with better opportunities to focus on improved interactions with each customer by removing some of the business-centric steps of a check-in process, while still fulfilling SOP obligations internally.
Challenges With Payment Handling
Generally speaking, the Hospitality Industry is facing three main challenges when it comes to payment processing at the moment.
The first challenge is regarding compliance requirements from authorities, as well as from providers. While there are global frameworks in place, such as PCI guidelines, different countries also create and update their own protocols, with PSD2 (Revised Payment Services Directive) in Europe being one of the better-known examples. PSD2’s recently revised regulations aim to make payments in the European Economic Area more secure by requiring banks to refuse non-compliant transactions – which means any businesses handling payments must be compliant lest they run the risk of having their transactions declined by issuing banks.
As Visa, MasterCard, American Express, and such companies are required to follow the guidelines, hospitality businesses in that region have been challenged to modify their own processes to remain compliant, and this includes hospitality vendors as well. As you can imagine, there have been a variety of reactions and commitment levels to tackle the new requirements, coupled with product release cycles that may not match the deadline. Even with solutions that are cloud-driven, pivoting in a timely fashion still requires exceptional efforts.
The second challenge relates to increased digitization and the higher investment in hardware over the years by operators. After moving on to solutions such as mobile POS, operators want to figure out how to get better ROI from these investments. Can a tablet a restaurant uses to run its POS operations be made into a multi-use device that also takes card payments, for instance, and eliminates the need to have application-specific devices that incur higher financial and informational costs?
As a revenue-generating business, hoteliers should look into streamlined payment handling, but not to the detriment of how guest interactions are handled.
Lastly, the need for alternatives to traditional payment methods was accelerated by the COVID-19 health crisis and has strongly presented itself to become one of the most sought-after solutions in the form of options that minimize contact and, therefore, germ transmission. Needless to say, these alternatives must also be secure and properly integrated with the property’s tech stack, ideally using existing hardware. In other words, we’re still looking for the ideal modern solution for hotel payment technology.
What We Can Look Forward To
The speed of changes in hotel payment technology and technological advancements, connected with other external circumstances such as the recent sanitary crisis, exposes the need for solutions and integrations that are cloud-based. Physically plugging equipment together or having multiple software applications running on the same server or same hotel/restaurant environment are becoming increasingly less desirable. Technology vendors and banking institutions are all trying to catch up and partner with one another to address this hurdle. After all, this is 2022– If I can stream a movie or show on my phone, why do I still need to use a serial cable for credit card integration in a hotel?
Additionally, technology providers are striving to get to a point where we have a true all-in-one device that will work for contactless payments, with true PMS integration. The world of credit card machines has only two suppliers for the equipment: French company Ingenico and US’s Verify. The global supply chain disruptions and chip shortage has hit the manufacturers hard, making it near impossible to get new equipment from legacy vendors in some parts of the world. As a result, it’s forcing the payment world into investing heavily in research to offer businesses and consumers the ability to accept credit card processing on their own phones or tablets. Called non-traditional equipment suppliers, solutions such as PayPal’s recently launched Zettle create a credit card machine out of what is actually an Android device and benefits from that ecosystem. This new capability has tech suppliers working to modify their applications to work in that particular ecosystem and make it more accessible in terms of both hardware and software.
Noticeably, different parts of the world are moving at different speeds. While Android-based devices have been the norm in China and parts of Asia and Southeast Asia for the last four years, in Western Europe, the UK, and North America this market has been almost non-existent and only now have they started to play catch-up, due to the availability of equipment that can be procured at the moment.
Yet another trend is how people and businesses are moving away from banking plastics – your traditional global system of debit or credit cards – and relying more on digital wallets and QR code-based payments, which tend to be more local or regional, such as GrabPay in Malaysia and Singapore, MobilePay in Denmark, LinePay in Japan, and so many others. Hotels and F&B operations now need to look into bringing those forms of payment into acceptance on property, and vendors are definitely allocating resources and time on R&D for these solutions.
Compliance and supply issues are the challenges vendors face in their operations, but these are an incentive for further research and improved solutions. Although integration between legacy hotel payment technology and new systems is always in the spotlight in hospitality, particularly when it comes to guest experience, payment integration tends to slip through the cracks of most executives’ plans. As a revenue-generating business, hoteliers should look into streamlined payment handling, but not to the detriment of how guest interactions are handled. In the race for customer satisfaction and top-notch offerings, smooth payment handling definitely plays a part, especially when it consists of the last impression your guest will get of their experience on your property, which has been shown to be one of the things they are most likely to remember.