Hotel Payment Processing for UK Hotels: Fees, Methods and Security

Hotel payment processing is the end-to-end process of accepting, authorising, settling and reconciling guest payments across a hotel website, online travel agencies (OTAs) and on-property channels. It also covers deposits, pre-authorisations, virtual credit cards, refunds, no-show charges and chargebacks.

For UK hotels, the right payment setup needs to do more than accept cards. It should connect every transaction to the correct reservation, protect guest data, support preferred payment methods and give staff a clear view of what has been paid, refunded or disputed.

This guide explains how hotel payment processing works, which fees UK hoteliers should compare and how integrated payments can improve security, cash flow, reconciliation and the guest experience.

Last reviewed: 13 August 2026.

Hotel payment processing at a glance

• A hotel payment system manages payments taken before, during and after a stay.
• Hotels need to handle card-present and card-not-present transactions, deposits, pre-authorisations, OTA virtual cards, refunds and chargebacks.
• Processing costs can include interchange, card scheme, gateway and processor fees, plus charges for terminals, international cards, refunds or disputes.
• UK hotels should consider PCI DSS, Strong Customer Authentication and the rules on consumer card surcharges.
• Integrating payments with a PMS and booking engine reduces manual reconciliation and links each payment to the correct guest and reservation.

Quick links

• What is hotel payment processing?
• How does hotel payment processing work?
• Which payment methods and channels should UK hotels support?
• What hotel payment processing fees do UK hotels pay?
• How can UK hotels keep payments secure and compliant?
• What are the benefits of integrated hotel payments?
• How does RoomRaccoon Payments support the guest journey?
• How do you choose a hotel payment processor?
• Frequently asked questions

What is hotel payment processing?

Hotel payment processing is the combination of technology, financial services and hotel workflows used to collect and manage guest payments. It connects payment methods such as debit cards, credit cards and mobile wallets with a payment gateway, processor or acquirer, card network, issuing bank and the hotel’s merchant account.

Hotels have more complex payment journeys than many retailers. A single reservation may involve a deposit when the guest books, a pre-authorisation at check-in, additional restaurant or spa charges during the stay and a final balance or refund at check-out. OTA bookings may also be paid using virtual credit cards for hotels.

When payments are connected to hotel reservation software and a hotel property management system, each transaction can be matched to the correct reservation and guest folio automatically. For concise definitions of the most common terms, see RoomRaccoon’s hotel payments glossary.

How does hotel payment processing work?

A card payment may appear instant to the guest, but several systems exchange information before the transaction is approved and the funds reach the hotel.

1. The guest initiates the payment. This can happen through a hotel booking engine, secure payment link, card terminal, online check-in flow or another approved channel.
2. The payment data is protected and transmitted. The gateway or terminal encrypts the information and sends it to the payment processor or merchant acquirer. Tokenisation can replace sensitive card data with a non-sensitive token.
3. The payment is routed for authorisation. The acquirer sends the request through a card scheme such as Visa or Mastercard to the guest’s issuing bank.
4. The issuer approves or declines the request. The result is returned to the hotel and guest. An authorisation confirms that the transaction can proceed; it is not always the same as final settlement.
5. The payment is captured, settled and reconciled. Funds are transferred to the hotel according to the provider’s payout schedule. In an integrated system, the transaction is also posted to the reservation, guest folio and financial reports.

Which payment methods and channels should UK hotels support?

Payment methods, transaction types and payment channels are related, but they are not the same. Debit cards, credit cards, mobile wallets, bank transfers and cash are payment methods. A secure payment link, booking engine or card terminal is a channel. A deposit, prepayment or pre-authorisation describes when or how funds are collected.

UK Finance reported that cards represented 64% of UK transactions in 2024 and that 57% of UK adults were using mobile wallets. These are general UK payment figures rather than hotel-specific data, but they show why hotels should support both cards and digital wallets. View the UK Finance findings.

Debit and credit cards

Cards remain central to hotel payments because they can support online bookings, deposits, pre-authorisations, card-on-file transactions and payments at reception. Hotels should distinguish between the following transaction types:

• Card-present: the guest pays at the hotel by inserting or tapping a card or device at an approved terminal.
• Card-not-present: the guest and physical card are not present, as with online bookings and secure remote payments.
• MOTO: mail-order or telephone-order payments entered through an appropriate payment environment. Hotels should never ask guests to send unprotected card numbers by email, chat or messaging apps.

Contactless cards and mobile wallets

Contactless payments allow a guest to tap a card, phone or wearable near a compatible terminal. Mobile wallets such as Apple Pay and Google Pay can add device-based authentication and reduce the need to handle a physical card. Exact availability depends on the hotel’s payment provider and terminal.

Virtual credit cards from OTAs

A virtual credit card (VCC) is a digital card number created for a specific payment or booking. OTAs such as Booking.com and Expedia may use VCCs to pay hotels. Each VCC can have its own value, activation date, expiry date and charging conditions, so hotels need a reliable process for monitoring and charging them on time.

Secure payment links

A payment link takes the guest to a secure hosted payment page. Hotels can use links for deposits, outstanding balances, group bookings, upgrades or remote payments without asking staff to record raw card details. Links can be shared by email, SMS or another approved guest communication channel.

Bank transfers and cash

Bank transfers can be relevant for corporate accounts, events, weddings or longer stays. Cash remains useful for guests who prefer or rely on it, although it requires clear handling, recording and reconciliation procedures. Hotels should select methods that match their property type, target markets and guest journey rather than assuming one setup suits every property.

POS payments and prepayments

A hotel point-of-sale system is not itself a payment method. It records purchases from outlets such as a restaurant, bar or spa. A PMS integration can add those charges to the guest folio for one consolidated bill. Similarly, a prepayment describes when the hotel collects money, not the method the guest uses to pay.

What hotel payment processing fees do UK hotels pay?

The headline transaction rate does not always show the full cost of accepting payments. A hotel should compare its complete fee schedule, card mix, average transaction value, booking channels and international guest profile.

The main components of a card processing fee

1. Interchange fee: paid by the acquirer to the cardholder’s issuing bank. The rate can vary by card type, transaction type and whether the payment is domestic or cross-border.
2. Card scheme fee: charged for using the card network and its services.
3. Processor, acquirer and gateway fee: the provider’s charge for authorising, processing, settling and managing the transaction.

Under the UK Interchange Fee Regulation, interchange is currently capped at 0.2% for qualifying domestic consumer debit card transactions and 0.3% for qualifying domestic consumer credit card transactions when the merchant, acquirer and issuer are all in the UK. Commercial cards and many cross-border transactions do not fall under the same caps. These percentages cover only interchange, not the hotel’s total processing cost. Read the Payment Systems Regulator explanation.

Other fees to compare

Blended pricing vs Interchange++

RoomRaccoon Payments offers Blended and Interchange++ pricing models. The main difference is how the underlying costs are presented.

Neither model is automatically cheaper for every hotel. The right comparison should use the property’s actual transaction volume, domestic and international card mix, OTA VCC volume and additional provider fees.

How can UK hotels keep payments secure and compliant?

Hotels process valuable card and identity data across websites, reception desks, email enquiries, booking channels and third-party systems. Reducing unnecessary access to raw card data and choosing secure, integrated workflows can lower risk.

Follow the current PCI DSS requirements

PCI DSS is the global security standard for organisations that store, process or transmit cardholder data. PCI DSS v4.0.1 is the current version, and its future-dated requirements became effective on 31 March 2025. Using a compliant payment provider can reduce a hotel’s compliance scope, but it does not remove every responsibility from the hotel. Read the PCI Security Standards Council update.

Hotels should verify a provider’s current compliance status and ask which responsibilities remain with the property. Staff should never copy full card numbers into emails, spreadsheets, chat messages or general reservation notes.

Use tokenisation and secure payment links

Tokenisation replaces card details with a token that can be used by authorised systems without exposing the original card number. Secure payment links allow guests to enter their information into an approved payment environment instead of sending it to hotel staff.

Support Strong Customer Authentication and 3D Secure

Strong Customer Authentication (SCA) is designed to reduce fraud by requiring additional verification for applicable electronic payments. 3D Secure 2 is commonly used for online card transactions. Exemptions and merchant-initiated transactions should be handled correctly by the hotel’s payment provider rather than applied as a blanket rule. Read the FCA guidance on SCA.

Control staff access

Give employees only the permissions required for their role. Refunds, manual transactions and access to financial data should be restricted and recorded. Multi-factor authentication, unique user accounts and audit trails help a hotel investigate unusual activity.

Keep clear evidence for disputes

Transparent cancellation, deposit, no-show and damage policies can reduce misunderstandings and support a hotel during a dispute. Retain the booking confirmation, accepted terms, proof of authentication, guest communications, check-in records and relevant invoices in accordance with applicable rules and retention policies. RoomRaccoon’s guide explains more about hotel chargebacks and dispute management.

Do not add prohibited consumer card surcharges

UK businesses generally cannot impose a surcharge for paying with a consumer credit card, debit card or comparable electronic payment method. Different rules can apply to commercial cards and other payment methods, so hotels should check the official guidance before adding a fee. View the UK Government guidance on payment surcharges.

For a deeper overview of tokenisation, authentication and fraud controls, read RoomRaccoon’s guide to hotel payment security.

What are the benefits of integrated hotel payments?

Adyen’s 2025 Hospitality Report found that 63% of hospitality businesses considered fragmented payment systems inefficient and time-consuming. Integrating payments with the PMS, booking engine, channel manager and relevant POS systems helps remove many of those disconnected workflows. View the Adyen finding.

1. Faster reconciliation

Integrated payments can automatically match a transaction to the relevant reservation and guest folio. Staff spend less time comparing terminal receipts, bank settlements and reservation records, while managers gain a clearer view through connected hotel reports.

2. A smoother guest journey

Guests can pay through the most appropriate touchpoint: during online booking, before arrival, at reception or through a secure payment request. They are less likely to encounter an unexpected third-party workflow or have to repeat information already supplied.

3. Fewer manual errors

Rekeying amounts and card information creates opportunities for mistakes. Integration reduces duplicate entry and helps staff see whether a deposit, balance, refund or VCC payment has already been processed.

4. Better cash-flow control

Automated deposits, scheduled payments and visible outstanding balances help hotels collect money at the agreed stage. Clear payment statuses also make it easier to follow up on failed or incomplete transactions.

5. More opportunities to increase revenue

A connected payment journey can make it easier to sell room upgrades, packages and extras before arrival. When linked to an automated hotel upselling flow, guests can select and pay for relevant add-ons without creating extra front-desk administration.

Read more about the business case for an integrated hotel payment system.

How does RoomRaccoon Payments support the guest journey?

RoomRaccoon Payments is an integrated hotel payment processing system designed to connect transactions with the rest of a property’s operations. Payments, reservations, guest profiles and reporting are managed within a connected workflow rather than as separate records.

Direct website bookings

The RoomRaccoon booking engine can collect a full or partial payment when a guest books. This can improve cash flow, support agreed rate conditions and reduce the need for staff to chase a deposit manually.

Online check-in and check-out

Hotels can collect guest details and applicable payments before arrival. Before departure, a secure payment request can be used for an outstanding balance. This is particularly useful for properties with limited reception hours and serviced apartments with a more self-service guest journey.

On-property and POS payments

RaccoonCardMachine supports integrated on-property payments. Hotel restaurants, bars, spas and other outlets can also connect through compatible POS integrations so charges can be added to the guest’s account.

Booking proposals and payment links

Group, event and special-stay enquiries do not always begin in the booking engine. A hotel can send a customised booking proposal with a secure payment link and confirm the reservation after the required payment is received. Learn more about turning hotel enquiries into direct bookings.

Virtual Wallet

RoomRaccoon’s Virtual Wallet helps hotels record advance deposits or credits that are not yet allocated to one reservation. This can be useful for wedding venues, corporate agreements and guests who retain an eligible cancellation credit for a future booking. The hotel should ensure that its terms and accounting treatment are clear.

VCC Dashboard

The VCC Dashboard brings together reservations, channels, card values, activation dates and expiry information. Virtual cards can be imported through the channel manager and scheduled for charging on the appropriate date, helping reduce missed OTA payments.

Chargebacks and refunds

The Chargebacks and Disputes Dashboard allows hotels to submit supporting documentation and monitor dispute progress in one place. Refunds can be initiated from the relevant reservation, helping staff keep the transaction and guest record connected.

How do you choose a hotel payment processor?

The lowest advertised rate is not necessarily the lowest total cost or the best operational fit. Before signing a contract, ask each provider the same questions:

• Does it integrate natively with your PMS, booking engine, channel manager and POS?
• Can it manage deposits, pre-authorisations, card-on-file transactions, no-show charges, refunds and OTA VCCs?
• Which debit cards, credit cards, mobile wallets and international payment methods are supported in the UK?
• What are the complete fees for domestic, commercial, international and card-not-present transactions?
• Are terminal rental, gateway, setup, refund, chargeback, currency conversion and payout fees clearly disclosed?
• What is the standard settlement time and can the provider hold a reserve?
• How does the provider support PCI DSS, tokenisation, SCA, 3D Secure and fraud monitoring?
• Can staff permissions and refund rights be controlled by role?
• What evidence and assistance are available when responding to a chargeback?
• Does reporting show the effective cost by channel, card type and property?
• What support is available to UK hotels, and during which hours?
• What happens to stored tokens, transaction data and hardware when the contract ends?

Independent properties should also consider whether the system can scale without adding unnecessary complexity. RoomRaccoon’s solution is designed around the connected workflows used by independent hotels.

Frequently asked questions about hotel payment processing

What is hotel payment processing?

Hotel payment processing is the process of accepting, authorising, capturing, settling, refunding and reconciling guest payments. It can cover online bookings, deposits, pre-authorisations, reception payments, OTA virtual cards, no-show charges, outlet spend and chargebacks.

How does hotel payment processing work?

The payment gateway or terminal sends an encrypted transaction request to a processor or acquirer. The request travels through the relevant card scheme to the issuing bank, which approves or declines it. After capture and settlement, an integrated PMS matches the payment to the reservation and guest folio.

What fees do UK hotels pay for card processing?

Fees can include interchange, card scheme and processor or gateway charges. Hotels may also pay for terminals, international or commercial cards, currency conversion, refunds, chargebacks, authorisations or faster payouts. The effective cost depends on the property’s actual card and channel mix.

What is the difference between a payment gateway and a payment processor?

A payment gateway securely transmits payment information from an online checkout or other payment interface. A processor or acquirer routes the transaction between the hotel, card scheme and issuing bank and helps manage authorisation and settlement. One provider may supply both services.

Does PCI DSS apply to UK hotels?

Yes. PCI DSS applies to organisations that store, process or transmit payment card data, including hotels that accept card payments. Using a compliant provider and tokenisation can reduce the hotel’s scope, but the property still needs secure staff procedures, access controls and an appropriate validation process.

What are SCA and 3D Secure 2?

Strong Customer Authentication requires additional verification for applicable electronic payments. 3D Secure 2 is a common method of authenticating online card transactions. The guest’s bank ultimately decides whether authentication is required and whether an exemption is accepted.

Can a UK hotel charge guests extra for paying by card?

UK businesses generally cannot add a surcharge when a consumer pays with a consumer credit card, debit card or comparable electronic payment method. Commercial cards and other payment methods can be treated differently, so a hotel should review the official rules before applying any charge.

What is the difference between a hotel deposit and a pre-authorisation?

A deposit is an amount collected from the guest and held under the booking terms. A pre-authorisation is a temporary hold placed on available card funds; it is not the same as a completed charge. The hotel should explain the amount, timing and release conditions clearly.

What is a virtual credit card for hotels?

A virtual credit card is a digital card number created for a specific booking or payment. OTAs may use VCCs to pay a hotel. The card can have a limited amount, activation date and expiry date, so staff must follow the channel’s charging instructions.

What is the difference between Blended and Interchange++ pricing?

Blended pricing combines several underlying payment costs into one rate or fee structure. Interchange++ lists interchange, card scheme and processor charges separately. Blended pricing is simpler to forecast, while Interchange++ provides more granular cost visibility.

Can hotel guests send card details by email?

Hotels should not ask guests to send unprotected full card numbers by email, chat, SMS or messaging apps. Use a secure payment link, booking engine or appropriate PCI-compliant payment environment instead. Staff should never copy card details into general reservation notes or spreadsheets.

Why integrate hotel payments with a PMS?

A PMS integration connects each payment, refund and outstanding balance to the correct reservation and guest folio. This reduces duplicate data entry, speeds up reconciliation, improves reporting and gives staff one place to investigate payment questions.

Official sources and further reading

• PCI Security Standards Council document library
• Financial Conduct Authority: Strong Customer Authentication
• Payment Systems Regulator: UK Interchange Fee Regulation
• UK Government guidance on payment surcharges
• UK Finance: UK payment method trends

Simplify hotel payments with RoomRaccoon

RoomRaccoon Payments connects payment collection, reservations, guest profiles and reporting in one hotel management platform. It helps independent properties collect payments at the right stage, automate reconciliation and manage VCCs, refunds and disputes with less manual administration.

Book a RoomRaccoon demo and try the platform free for 30 days with no payment details required.