Security deposits are paid by your guests, and allow you to protect your properties from any kind of deterioration or additional cleaning fees.
Almost all bookings being made online, you can choose from several options when managing your security deposits.
How can you define the amount of a security deposit? Which option should you choose? We tell you all you need to know in this article.
Security deposit: under which conditions?
No matter how long the stay lasts and the cost per night: you should always require a security deposit!
Then, how can you receive the payment in due form?
As you can imagine, asking for a payment in cash -which cannot be tracked or counterfeit- or by check -facing risks of unfunded accounts and being geographically limited, as creditors and debtors must be domiciled in the same country- aren’t the best options.
The amount of the security deposit isn’t set by law. In practice though, the amount doesn’t exceed 20 to 25% of the rental cost. This amount must be written in the rental contract. Cashing is then made during the check-in inventory, which must be followed by a check-out inventory when the guests leave the property. This allows you to take stock of your rental situation and handle contentions, if there are any.
If no damage or degradation is observed, guests should be refunded within a timely manner. This period often lasts between 7 to 10 days depending on the rental managers and must be written in the rental agreement.
However, if works or excessive refurbishment are needed in the property, provide the related bills and subtract the amount charged to the security deposit.
Handling security deposits: 5 possible solutions
There are 5 common solutions allowing you to handle security deposit payments and refunds:
Online credit card payment terminal: simple and effective online payment solution, using the guest’s credit card. Stripe, Paypal, Verifone or Ingenico (in addition to an online payment contract with your bank) can be used for such payments. Fees and commissions vary depending on the solution used.
Card imprint: with this solution, travelers are not debited when paying the security deposit. The imprint is valid for 7 days and is renewable. You can also directly make an imprint on the day the guests arrive, which will then be valid during the whole stay. This service is also offered by Stripe, you just need to untick a box when cashing:
Bank transfers: in general, no commissions are taken on bank transfers but transfer fees can be applied, depending on banking establishments. A period going from 1 to 3 days can be necessary before to receive the payment. Also, note that adding bank account details, especially internationally, can be limited by some banks.
Paying security deposits through vacation rental marketplaces:
Let’s take, for instance, the 5 rental marketplaces with which we’re connected. Here’s how you can manage security deposits:
Airbnb: the easiest one! Airbnb keeps a credit card imprint et gives you a 48-hour period after the guests have gone to report any incident and use the deposit.
HomeAway: as a BookingSync client connected to HomeAway through the API, the payment gateway which has been set up in your BookingSync account is used for the HomeAway bookings cashing. It’s up to you to then decide on whether you want to cash the deposit during the booking payment -generally, along with the balance- or if you prefer to handle this during the check-in.
Booking.com doesn’t handle security deposits. Usually, managers receive the travelers’ credit card details and can manually debit them, or they proceed to a credit card imprint through their payment gateway. They can also choose to handle this during the check-in. We'll soon offer the same payment integration as with HomeAway, it will then be possible de debit both the security deposit and the booking when paying.
TripAdvisor cashes the travelers’ security deposit and gives you a 7-day period after they have left to report any incident and use the deposit. If no incident is being reported, TripAdvisor refunds the travelers.
misterb&b doesn’t handle security deposits.
Concerning HomeAway, Booking.com (soon), TripAdvisor and misterb&b, if you decide not to cash a deposit at the same time as the rental payment, and not to collect it through these marketplaces, you can ask for the security deposit payment by sending a BookingSync notification. This will send a secured payment link and collect the money through your payment gateway, for example.
Handling security deposits can be tricky, but it’s an essential point to your vacation rentals management and your peace of mind. Take the time to compare the existing solutions to find the one that best suits you, depending on your priorities: time gain, money saving or user-friendliness.