The article under analysis is dedicated to the evaluation of payment card acceptance and its impact on the hospitality industry. Specific emphasis is placed on the challenges the hospitality merchants face while accepting card payment and taking responsibility for appropriate data storage and processing (Cannon et al., 2010).
The point is that payment networks consider the hospitality industry to be an eligible payment card acceptance system. The payment card networks resort to this sphere as the most sensitive to card fees and, as a result, there are a number of terms and conditions that merchants should accept while establishing relationship with payment card representatives.
Due to the close interaction with payment card system, hospitality workers usually conclude a card-processing contract with a bank, which is also called an acquiring bank. The latter engages third parties, independent sales organizations, to regulate card sales.
There are many other entities participating in agreements that dictate new rules in monitoring merchants’ liability that often create gaps in protecting the merchants’ rights. Thus, the paper focuses on the current developments and pitfalls in Washington concerning the relationships between merchants and payment card systems to provide viable solutions for the hospitality representatives and resist the increased costs and liability risks.
The relationships with various entities acting as third parties constitute a challenge for hospitality merchants due to the property issues, installation, and consignment procedures. Excess liabilities imposed on merchants discourage the hospitality industry from developing payment cart acceptance system because they threaten the welfare and profitability of the venture.
In particular, the article explains that merchants usually spent resources on ensuring technological support that relate to card payment. As a result, banks offering credits have significantly increased their revenues at the expense of the hospitality industries, but that did not contribute to the profitability of the latter.
Dependence on these networks makes the merchants be bound with obligation both to the bank systems and to their customers who rely heavily on ATM systems. What is more problematic is that not all conditions and terms are presented to merchants who are ignorant of all restrictions (Cannon et al., 2010).
For instance, MasterCard does not allow merchants to provide any discount to their clients, which reduces the flexibility of payment conditions at hospitality industry. The emerged confrontation among acquirers, merchants, and processors has provoked discussion concerning the penalties and fines that should be introduced to control the situation.
With regard to the above-presented challenges, the hospitality industry is under the pressure on the part of the government and the banking system because the majority of liabilities are imposed on merchants. In order to solve the issues, the legal regulations and standards should be carefully reconsidered by the government.
Specific attention requires the laws that regulate the merchants’ services to clients. In particular, the government should realize that hospitality industry is among the most profitable ventures in the country and, therefore, it should provide new incentives and opportunities for merchants to deliver high quality services at affordable prices.
There are many other approaches to take control of the situation that can exclude one-side agreement. In particular, hospitality merchants must be considered when Visa or MasterCard agreements are concluded because their decisions and transactions limit the merchant actions.
A compromise can be reached through inviting merchants into the contract relations because it produces fewer problems and increase the control of the hospitality management. Hence, the agreement does not only hold the merchants responsible for the penalties and fines, but also allow the card payment acceptance to monitor the procedures and regulations.
At the same time, merchants can be more knowledgeable of the restrictions that should follow while regulating their relationships with clients. Second recommendation to improving hospitality management refers to technological advancement of credit card systems.
Integrating innovative software will allow the hospitality merchants to take greater control of daily operations and property maintenance. Balancing transactions and additional charges can reduce the amount of time spent on negotiating for pricing strategies within hotels.
The new software can also imply developing of process report module, an application that can assist merchants in daily business operations. Such an introduction can also be beneficial for the banking system that take control of the merchants’ activities and reduce the risk of breaches.
Hence, high quality software can settle the dispute between the banking operators and merchants due to the increased accountability and accuracy. Balance procedures should prior to credit card posting to avoid discrepancies and violations with regard to all parties concerned.
In conclusion, it should be stressed that the article introduces a detailed analysis of statistical and analytical data on legal and management challenges that hospitality industry encounter while integrating payment card acceptance. There is a strong necessity to reconsider the governmental policy toward the hospitality merchants to avoid further complications in future.
The focus should be on concluding new agreements in which the rights of merchants, banking operators, and other legal entities are taken in equal consideration.
Reference
Cannon, W.S., Cannon, C., & McCormack, M. (2010). The U.S. Payment Card Industry: Select Challenges and Issues from a Hospitality Industry Perspective. The Hospitality Law Conference. pp. 1-24.