Advantages/Disadvantages of Using the C1
to Calculate Owner Credit Card Fees.
Article ID#: KB000196
Credit Card Fee Types
There are two ways to charge owners for credit card fees
incurred by the management company.
- Using the C1 Flat record to charge a flat fee on the room
revenue portion of the total charges and any other buckets that are setup to
pay the owner on a paying guest reservation.
This option does not take into account the payment. It only looks at
the room revenue charges on the folio.
- Using the credit card fee recorded on each of the credit
card master records. This option charges a fee on all credit card
payments. There is no way to differentiate when a payment is taken for
room charges and when a payment is taken to pay for incidental
charges. The owner will be charged a fee for all payments received
when a reservation is checked-in to the unit he/she owns.
How C1 Flat is Charged
When considering how to charge owners for credit card
fees incurred by the property, the following considerations should be taken into account:
- The C1 Flat feature evens
out credit card fees to owners by basing it on actual owner revenue and not
the actual credit card payment which can include miscellaneous charges for
which the owner does not receive revenue.
C1 Flat feature allows you to take group payments on one reservation.
When using the old method, payments had to be split among all reservations
so no one owner was charged the credit card fee for the entire group
C1 Flat feature prevents the situation in which a reservation crosses months
by one day and the revenue is recorded in one month and the credit card fees
are recorded on the following month.
C1 Flat feature prevents fluctuating fees on owner statements. The
various credit card vendors may charge different fees for credit card
transactions. These fees can sometimes confuse owners. The C1
Flat feature uses a single pre-determined percentage to charge owners a fee
on all room charge transactions.
reservations between units is not an issue as this fee is based on the
nightly room charges that occur in the room the reservation is checked into
rather than a payment that may be taken when the reservation is in either of
credit card fee will display in the reservation section and may be taken out
of gross revenue prior to processing the management commission.
Disadvantages of C1 Flat
The following statements represent disadvantages of
implementing the C1 Flat logic:
C1 Flat feature uses the same percentage no matter what type of credit card
is used as a form of payment or if the payment is made with cash or a
check. RDP has analyzed data with several customers and found that
more than 90 percent of all payments taken are Visa and MasterCard
payments. American express makes up a small percentage of payments as
well. In our research, we found that very few cash payments are taken
to pay for room charges.
card fees should be averaged to determine the fee percentage that will be
charged to owners.
order to implement the C1 Flat feature, the management company may need to
change the management contract with its owners.