COVID Affects Credit Card Payment Processing

Accepting payments on a credit card requires the support of companies known as, “Merchant Services.” Think of them as the clearing houses for credit card transactions. Beginning 6/25/20, First Data Corporation, the Merchant Services provider that Seachange uses has been holding Seachange Credit Card deposits, without letting us know.  This has caused us many issues.   First Data Corporation is the largest credit card processing company (“Merchant Services” provider) in the US. It is likely that other Merchant Services providers will follow suit. I have also seen growing complaints from Hosts and Property Managers listing on VRBO that VRBO is delaying Owner payments for a month or longer. This likely is Merchant Services caused, and not VRBO.

Why has Merchant Services been doing this? As a result of COVID, credit card processing companies are fearful that Guests will be disputing charges and requesting refunds.  This fear is causing credit card processing companies (“Merchant Services” providers) to withhold payments to vacation rental companies. They want the money on hand in case of reversals.

What does this mean for Seachange and our Owners? Under normal circumstances, Seachange pays its owners on 15th and 30th of the month.  Until the hold on our credit card deposits has been released, SVR will not be able to pay out owners or our commissions.  The only payments we will be making is to our vendors.

Additionally, our credit card processor and many in the vacation rental industry have asked us to change our payout structure for owner payments.  Starting January 1, 2021, SVR will change it Owner payments. Once a booking is made, the property owner will not receive their money until the guest stay begins.  We can no longer pay our owners in advance of the guest stay.  The credit card companies are fearful now due to the pandemic, that vacation rental companies will be unable to get money back from owners to satisfy any guest refunds.

Throughout the pandemic, Seachange’s credit policy for COVID related cancellations has worked perfectly.  Most guests have been very happy with our COVID program and Seachange has remained clear of the public complaints regarding COVID vacation rental cancellation policies.  A few Guests have gotten nasty and demanded refunds, or have provided documentation of particular hardship, and our Owners have generally accommodated their request.  In many cases we have been able to rebook these affected bookings.

So far this year, Seachange has had only three Guest chargebacks due to COVID related cancellations. In breaking news, I can confirm that we just received notification that, due to our documented contracts and cancellation policy we won all three chargeback disputes!

Additionally, in our prior six years in business, we have only had three total Guest chargebacks. A total of six chargebacks in six years is an industry low rate of chargebacks. Yay us!

Please call our VP of Finance, Tom at our office (302) 727-5566 with questions.

Thank you, Andy Meddick CEO Seachange Vacation Rentals.