How SCA will Affect Hospitality Industry

Welcome back, everybody, again to the hospitality community. As I put in the event, and as I mentioned, it is something that is really important and it's something that nobody's talking about. Hence why when I saw Evan's blog about it and I just knew that we needed to do something and seeing that we've got a lot of people in here who it does affect, that is why we're doing it today. And Evan has kindly given up his time. So, Evan, just when you are ready, just introduce, please, who you are, what you do, the name of your business and a bit of background about you.

I'm Evan Davis, I'm from the Birkin Factory. So it's a property management system for hotels and B and Bs. I started the business from having my family's hotel in Wales for, like, they've had it 40 years. So I kind of grew up around it, worked in the business. Similar to you, Mark, I think. Did you grow up in the hotel industry as well?

Yep, that's right.

I think it's very similar kind of background. Grew up around it. Everyone had to switch to online booking systems and everything. So that's where I was frustrated with what was out there, you know, So I kind of done my own thing. So we started booking factory four years ago. So four years old, 150 hotels live at the moment and it's going really well.

Amazing. Thank you very much. So where are you currently based right now? You? Amsterdam.

Yes. So we started in Wales for first two years, moved to London for the second two years. So it's four years and now we're in Amsterdam. We're looking to set up a second company here, probably next year.

So over to you and just let us know everything about what we need to be looking out for.

All right. So basically I was chatting to Stripe two weeks ago. They'd mention PSD2. I was like, what's PSD2? Like, oh, you don't know? I'm like, next year it's going to be a new European law where it's going to affect the hotel industry. It's like, what do you mean? Nobody's talking about this. It's crazy. I'm not an expert. So this all came from a quick chat with Stripe. Basically, the biggest part in PSD2, there's a lot. There's like 50 pages of stuff. But the important bit for hotels is it's just a tiny little section where it says you cannot charge anyone's card without two factor authorization. Okay. So that means you just can't Charge anybody's card without them getting a text message and saying yes. Or maybe their bank app pop up and they have to agree to it or something like that. You don't like. You log into Facebook and it says we had to send you a text message because, you know, we don't recognize this computer or something.

Yeah, yeah.

Just enter the code and you can log in. The new law next year is going to be basically that for pay months and anyone who charges cards without that is going to be either not allowed or they can just charge it back easily right now.

So what was Stripe saying about this to you? And like what can you. What made you write the blog post and what do you think is going to be.

So, yes, basically what happens in hotels now and B and Bs and everyone really is it's no big deal if you charge people on arrival or departure. Okay, that's simple. If you're charging on arrival or departure, you've got the two factor. The chip and PIN is two factor. Okay? To charge a card, they have to put the card in and actually put their PIN number and you're safe. The problem is non refundable workings or deposits. That's the problem. So, you know, when you get a booking with someone's card, you can charge it that day, tomorrow, next week, whatever, right? And next year that's not going to be possible. You know, that's why Stripe is working with Birkenacom. They're working together to fix. What's going to happen is Buckencom's whole model is passing the car to the, the BNB and Guest house, you know, and hotels. But now, as you notice, they start charging the cards on the website.

This is just booking.com and stripe that are onto it. So basically what we're saying here, think of it going back to the booking factory and obviously with your channel manager and the PMS and all of that. So basically when someone books on your website and a lot of places, and I know ours does, we ask for a deposit at a time. How is that going to affect direct bookings?

How will that affect direct bookings? You're totally safe as long as you use 3D secure. Any direct bookings, as long as they're paying when they make the booking and it's 3D secure, you're covered if you're just taking the car details and then charging after you're not. You have to make sure the booking system takes the deposits or the four payments or whatever when they book and 3D skewer.

So here's a question and I know a lot of people do this and I know we, we used to do this at the granary. We have somebody call up and they call up regular guests or first timer and they say, hey, I'd like a booking for the 1st of December for two nights. Yep, sure. 60 pound deposit and they give you the card deals. And as you're giving you the card details, you're typing it in on your card machine. For example, is that still valid for going through a card machine or not?

No, according to the rules it's not two factor authorized because you're not sure the person on the phone is the person the cardholder is.

Very true.

So you need some kind of payment request or something to go to them. That's the safest way.

Would it be. Yeah. Would it be where you could put it straight into. So I'm thinking free to book or wherever you can go in and you can add in the card details straight into the system on your pms. Is that it? Or is it best to send a payment request?

Because payment request is 3D secure. That's the two factor section.

Yeah.

The whole reason the EU is doing this is the fraud aspect.

Yeah.

You guys in the whole country is fine. People in London are dying like big time. The fraud is, is amazing. So we had one of our, one of our customers had 20,000 pound chargeback only six months ago. In one month. Okay. So basically they were service apartments. They, they're doing self check in.

Yeah.

And, and the, they didn't check the cards that people paid with. So they took all these non refundable bookings, charged the cards, people show up, stay the night and as soon as a couple of fraudsters, you know, got away with it, they told all their friends and then all their friends are staying there. Their business was booming. Like it's amazing. And then chargebacks like crazy, like 20,000 straight away. And they learned the lesson. But the EU, they're really sick of this, you know, and the sick of fraudsters using credit cards they don't own. The cardholders are pissed off, you know, because it, you know, imagine you that someone stole your card and stayed in 10 hotels. You have to, you have to go to the bank and go, I didn't stay in these 10 hotels. That's like a lot of stress.

Yes.

So it's protecting everyone, it's protecting the business, the cardholder. It's only the fraudsters lose out and the businesses just have to change the way they do business.

So what would be in your Opinion the easiest way to make sure you are ready for the PSD2 changes.

Okay. The. We're still not sure what happens with no shows and stuff like that because I think. I don't know if it's going to be a gray area that you can get away with. But definitely non refundable bookings and deposits. You have to get the OTA to charge it for you. Okay. So Expedia is fine because they got the Expedia Merchant model and Bucking.com can do it now as well. So it's just switching your OTAs over to taking payments for you that's the important bit. So they will, they will take the damage if there's any problems.

So that's the virtual card. Payment with.

Virtual card doesn't come under the rules. So you're fine because it's not a cardholder, it's a business thing. So you can take a virtual card or just let them pay you end of the month. They usually do offer you both ways.

This is massive and this could really transform the way how booking.com do business. And it does make sense. If Stripe have been in communication with them that why they are going down the virtual card route because I've noticed this year that they're pushing it more and I've noticed when I've done a few dummy booking runs through booking.com to test a few things. I know now that they it makes sense why they were really prompting to pay up front. As in Pay via my PayPal or Pay via my whatever. Obviously this is coming through.

Yes.

So who doesn't?

This law was made two years ago.

Okay.

So the EU made it two years ago and they've said there's two years to implement. So the deadline is next year.

Yeah.

So it's like gdpr.

Gdpr, I'm gonna say similar to gdpr. A law that was passed and then. No, everybody forgot about it and then panicked last minute. When. When does this actually come into play?

I think the first stage is January, February and then the last stage of it is October, November. Okay. So I'm not sure which one's first.

We've got pretty much got a year. Alison has asked in the group, can you not just send a guest a payment link to pay by credit card from free to bottom book to take the deposit? Yeah, that's what Evan's saying. That's the payment link.

Yeah, that's fine. When you go payment request payment link, they have to put their own car details in and 3D secure. So 3D secure. Is the two factor section.

Yeah. And this is where the problem, I'm thinking, for getting money comes in, as in that a guest calls up.

Yeah.

And they say, right, we want to make a booking. And they, you go, yep, Sam, that's great. It's just going to be a 60 pound deposit. Normally you get the card details and that's the guest. Then they're in. You know that psychologically, as we're talking about the booking process, the guest is, right, I've given in car details, we've now got our booking. If you then say, hang on a second, what I got to do is I got to send you a payment link. You got to click on that payment link to secure your stay. That's where there could be fallout, as in, you may type in email address wrong or they might not get the email, or they might just forget to do the email and the payment. That's where I feel that there may be a little bit of lost booking potential there. You see what I mean?

Yeah, I get, I get it. You know, but you could do it over the phone. So you go, oh yeah, you know, like I'm sending it right now. Can you get it?

Yeah, yeah. So you could say, right, you buy your computer. Yep, I'm sending you a payment link. Please process it now. So Alison, hopefully that answers that question.

And, and Mark, that's, that's way safer for the cardholder as well. So the pci, the PCI security rules, it's quite restrictive. You know, if you're writing down credit card numbers, they're very, you know, you have to lock them up, you have to have access controls. Like technically, everyone who looks at card numbers, you're supposed to write it down, who looked what when. You know, that's, that's crazy already. I know. Nobody much is doing it. Yeah, technically anything you write down, like booking with credit card details, you have to lock them up. You can't just have a housekeeper walk past and see it, you know, and then whoever looks at it, you're supposed to have a log file who looked, what time, what reason. You know, not having these car details is kind of a good thing. Yeah.

So do you envision. And I can see this now, just talking about this in 5, 10 years time where we wouldn't have these payment machines in our properties.

Would you, would.

You envision it where it's all literally done via 3D, secure text, email to phone and then people check out Vivat instead of like giving you a physical?

No, I think the physical thing is still going to be very popular. You know, if you've got a bar, restaurant, it's simple, right? It's just there, it's topic.

I don't meant for bar and restaurant. I meant for hotels and for. Well, not guest houses, hotels, the bigger.

Ones still need it. You know, if you stay an extra night or something, it's not. It's gonna be a pain to tell them to look at their phone and pay through the phone. The smaller ones, no, you don't need it. And a lot of smaller ones don't already. They just do everything through Stripe. Yeah.

So if you're watching this on the live or even if you're watching this back on the replay, a question that I've got then that will help me answer this question. That question is, do you still have a chip and PIN device, credit card card payment machine in your property? Guest houses, small hotels, obviously, rental properties, as in cottages and service apartments. I don't think I've met anybody who's ever got one of them. But more for the small guest houses that are watching, more for the small hotels. Do you have a chip and PIN device? I know a lot of people do, but it'll be interesting to see that with this news. If you are still going to use that device because you pay a lot to have that device in your property with the subscription and whatnot, or are you going to just go more down the route of having Stripe or worldpay and having it linked up to the Booking Factory? Free to book in your channel manager. Like Evan just said, the laws are going to start coming in January, February up to October, November. So we're giving you a bit of notice now. Final thing, if anybody wants to find out more about the Booking Factory or more about what you do. Evan, where's the best place for people to come and find you or maybe find what you're writing and more blogs like this?

Just the website, the booking factory.com and there's a link to the blog there. Yeah, that's it. That's it.

Nice. I really appreciate that. Thank you to everybody who watched. Well, thank you very much, Evan. Thank you very much for tuning in. I will speak to you very soon.