The owners of vacation rental properties have increasingly complex payments needs, due to both the pandemic-driven shift to digital commerce and the ongoing disruptions in the travel industry.
The software providers that serve this market and similar niches are finding that they can address these issues by providing more nimble approaches to handling the payments associated with bookings, cancellations and delays.
"Our segment of hospitality has a lot of specialized payment needs that require more tailored solutions than what we could offer with off-the-shelf technology," said Vered Schwarz, president and chief operating officer at the vacation rental software provider Guesty.
The company rolled out GuestyPay, a custom approach, last month.
Guesty's clients typically manage online bookings from multiple online travel companies like Booking.com and VRBO. But unlike hotels, which typically handle card payments at a check-in counter, all vacation rentals are card-not-present, and cancellations and chargebacks can be contingent on airline disruptions, which have become more frequent, she said.
Customer complications around advance-reservation discounts, damages and complaints in vacation rentals also arise more often than with traditional hotels. Increasingly, vacation rental operators want to offer add-on purchases for guests who extend their stay or take advantage of other services offered, according to Schwarz.
"Because we know the unique challenges of vacation rentals, we can manage risk and underwriting and reduce our customers' exposure to chargebacks while educating them in evolving ways to use payments to increase their revenue," she said.
Guesty previously used only Stripe to handle payments, but its clients demanded an option with more features to resolve issues within the vacation rental industry, said Schwarz.
GuestyPay's customized payments approach includes technology from Amaryllis, a white-label payment orchestration tool that has enabled Guesty to customize its offering. Guesty's own software developers have further customized GuestyPay to suit different regions.
"Each geography where we operate has its own specific payments needs, and the one-size-fits all approach no longer worked for us as demands from our operators became more specific," Schwarz said.
The problem Guesty faced is happening across many other small-business niches.
GlossGenius, a software platform that helps beauty and spa operators run their businesses, recently worked with Stripe and Apple to enable stylists to accept contactless payments with Tap to Pay on iPhone through an integration with GlossGenius' other business-management tools.
"Payments are a critical part of our stack for business owners, who demand intuitive workflows," said Danielle Cohen-Shohet, founder and CEO of the eight-year-old New York based firm.
These innovations address the same problems that Square and Clover do, but they approach from a different angle, according to Rodman Reef, managing principal with Reef Karson Consulting.
"Whereas Square added business management tools to payments — and Clover brought payments together with a range of software to run your business — now we're seeing software vendors layering on payments to further automate processes. It gives these software providers one more thing to sell," Reef said.
Longtime payments provider BlueSnap also has seen a surge of business since the pandemic, coming from small- and midsize business software providers adding BlueSnap's payments services onto industry-specific platforms.
"Before the pandemic, we were selling primarily to merchants who directly integrated BlueSnap for payments acceptance, but since 2020 our biggest growth is with small-business platforms adding customized payments acceptance for their business-to-business customers," said Ralph Dangelmaier, CEO at Waltham, Massachusetts-based BlueSnap.
BlueSnap is seeing strong demand from business-operations software providers that cater to lawyers, doctors, dentists and educational institutions, he said. These vendors typically white-label BlueSnap's payments acceptance tools, replacing generic approach from a third-party processor, Dangelmaier siad.
"The pandemic drove this trend where payments became digitized, then business software providers wanted to bring payments under their own roof to create a tighter relationship between these business software platforms and their customers," Dangelmaier said.
For Guesty, adding a bespoke payments approach for vacation rental operators has created stickier relationships with existing clients and helped the company attract more customers in an expanding, highly competitive industry, said Schwarz.
GuestyPay currently is available only in the U.S., with plans to expand it to other global markets soon.
Credit and debit cards are GuestyPay's only payment options now, and the company is eyeing opportunities for enabling direct debit and ACH payments around the world.
"Most consumers prefer credit and debit cards, but we're looking at adding ACH and creating pricing incentives to encourage its growth," said Schwarz.
Guesty, which currently has about 800 employees between 15 global offices and headquarters in Tel Aviv, raised $170 million last year in funding, bringing its total raised to $280 million.
