How to configure a damage/security deposit

In Lodgify you can configure a damage deposit (also referred to as the security deposit) in case the guests have caused any damage to your rental. This deposit payment can either be charged manually on the guest's arrival and returned on check-out, or it can be pre-authorized (held) on your guest's credit card prior to the arrival and will only be charged unless damage occurs. This enables you to simply deduct the cost of repair or replacement from the damage deposit which is due to be released if the guests have caused any damage to your rental.

๐Ÿ’ก Note: When enabling the damage deposit pre-authorization, the damage deposit value will only be sent to VRBO. If you select to manually charge and refund the deposit, the value will be sent to Airbnb. For Expedia and Booking.com we do not synchronize the damage deposit. For more information about the damage deposit and OTAs, check out this article.

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Configuring the damage deposit to be charged manually

You can configure the damage deposit in the Policies section of your account so that the guest will be made aware in the checkout and on the Rates page of your website that a damage deposit will be due on arrival. To configure the damage deposit, follow these steps:

  1. Go to your Main Menu in the top left corner and select Settings. From the left menu bar select Policies. Here you can choose to either create a new policy by clicking Create Policy in the top right corner or to Edit an existing policy by clicking on the pencil icon.2019-10-14_1054.png
  2. A slide-in window appears on the right side of the screen. Scroll down to Damage Protection, and select Yes, a damage deposit is requiredDefine your protection method as either Manually collect and refund
    ๐Ÿ’ก Note: The guest will be made aware in the checkout, and on the Rates page of your website that a damage deposit is due.
  3. Configure the calculation of your damage deposit as either a flat amount, a percentage of the booking cost, or as a percentage or flat amount.
    Setting Notes
    Flat amount Set a fixed fee deposit to be charged to all incoming guests, regardless of the length of their stay.
    % of booking amount The amount of the damage deposit to be charged will depend on the cost of the booking.
    Percentage or flat amount Depending on the total booking cost, either a flat amount or a percentage of the booking cost will be due. The greater amount of the two will be the final damage deposit due.

Pre-authorizing the damage deposit amount

โœจ Feature not available in the Starter Plan!

The pre-authorization is a convenient method of handling the damage deposit and it's a very common practice in the vacation rental industry. You will temporarily hold (not charge) the amount of the damage deposit on your guest's card. This enables you to simply deduct the cost of repair or replacement from the damage deposit which is due to be released if the guests have caused any damage to your rental.

If you have chosen to pre-authorize the damage deposit amount, you will need to configure the protection schedule. This defines when your ability to temporarily hold funds on the guest's card will start, and until when you can continue to do so. Lodgify will automatically schedule the start date of the protection period for each booking with an agreed quote that was booked under a policy in which the pre-authorization is configured.

Requirements & Issues

  • โš  Important: The pre-authorization is a Premium Feature that is not available in the Starter Plan.
  • The option to pre-authorize your guests' credit cards is only possible if you have a credit card payment gateway enabled in Lodgify. The four options are Stripe, Braintree, Payyo, and Authorize.Net (NOT Paypal). If you do not use one of these gateways, you will need to handle the damage deposit manually.
  • Make sure you don't set up the damage deposit in the policy and as a fee as this will double-up.
  • The pre-authorized amount will always be released automatically after a max. of 7 days.
  • The guest needs to have made at least one payment via credit card before the damage deposit can be authorized so that the credit card details are saved in the system โžก make sure that the protection period starts after the first payment.
  • Make sure you check your credit card gateway settings to either automatically pre-authorize the damage deposit or do the pre-authorization manually.

Configure the pre-authorization

You can configure the pre-authorization of the damage deposit in the Policies section of your account:

  1. Go to your Main Menu in the top left corner and select Settings. From the left menu bar select Policies. Here you can choose to either create a new policy by clicking Create Policy in the top right corner or to Edit an existing policy by clicking on the pencil icon.2019-10-14_1054.png
  2. A slide-in window appears on the right side of the screen. Scroll down to Damage Protection, and select Yes, a damage deposit is requiredDefine your protection method as Authorize deposit on card. 
    ๐Ÿ’ก Note: The guest will be made aware in the checkout, and on the Rates page of your website that a damage deposit is due.
  3. Configure the calculation of your damage deposit as either a flat amount, a percentage of the booking cost, or as a percentage or flat amount.
    Setting Notes
    Flat amount Set a fixed fee deposit to be charged to all incoming guests, regardless of the length of their stay.
    % of booking amount The amount of the damage deposit to be charged will depend on the cost of the booking.
    Percentage or flat amount Depending on the total booking cost, either a flat amount or a percentage of the booking cost will be due. The greater amount of the two will be the final damage deposit due.
  4. Define the protection period by configuring when the pre-authorization should begin and end. Lodgify will automatically schedule the pre-authorization for each booking with an agreed quote.
    ๐Ÿ’ก Note: When defining the protection period, keep in mind that before the damage deposit can be pre-authorized, the guest needs to have made at least one payment via credit card, so that the credit card details are saved in the system.
    Damage_Deposit_Scheduled.png
    ๐Ÿ’ก Note: All pre-authorized amounts will be automatically voided (released) after 7 days, regardless of when you have scheduled the protection period to end. This is a general limitation of the credit card industry. Once a pre-authorization is voided, we will notify you via email so that you can manually issue a new pre-authorization to continue holding funds in case of longer stays.
  5. Once the policy is set up, go to your Settings, and select Payments. In your credit card gateway settings you can now select if the damage deposit will be pre-authorized automatically (default setting), or manually.
  Notes

Automatically issue the pre-authorization

Lodgify automatically pre-authorizes the damage deposit as scheduled for each booking with an agreed quote, according to the booking's policy.

๐Ÿ’ก Note: Be aware that in case the Pre-authorization fails, you will not be notified automatically.

To turn the automatic pre-authorization off, you can untick this option under the Damage protection settings of your credit card gateway.

Authorize_automatically.png

Manually issue pre-authorizations

The damage deposit amount is not automatically pre-authorized. Instead, you will be able to manually issue the pre-authorization on the start date of the protection period for each booking with an agreed quoteaccording to the booking's policy.

To manually issue the pre-authorization:

  1. Enter the booking and scroll down to the Damage Protection box.
  2. Click on the "..." and select Authorize.
    Manually_pre-authorize.png
  3. A slider will open. Enter the amount to be pre-authorized and Save.

Capturing an amount for damage

Once an amount has been pre-authorized, you can capture (charge) amounts due for repair or replacement whenever there are damages to your rental caused by the guest within the protection period. However, if you only capture part of the pre-authorized amount, the remaining amount will be voided (released). In the following, we will show you on a use case how to capture an amount for damages and then manually pre-authorize the remaining amount for the rest of the stay.

๐Ÿ’ก Note: Funds cannot be captured outside the protection period. For example, if in the policy you selected for the deposit to be pre-authorized 1 day before check-in and released 5 days after check-out, funds cannot be captured 6 days after check-out.

๐Ÿ”Ž Use case: You pre-authorized 270$ and then capture 10$, the remaining 260$ will be voided. However, if you are still within the protection period, you can manually pre-authorize the 260$ again.

โžก How to Capture (charge) an amount for damages

  1. Enter the booking and scroll down to the Damage Protection box.
  2. Click on the plus icon next to the transaction, and select Capture.
    Capture_amount.png
  3. A slider will open. Enter a short description of the damage and the amount to be captured (charged).
    ๐Ÿ’ก Note: As for all credit card transactions, a transaction fee of 1% will be applied over the captured amount. For Stripe payments, the transaction fee is 1% + VAT.

โžก How to Pre-authorize the remaining amount

  1. Enter the booking and scroll down to the Damage Protection box.
  2. Click on the "..." and select Authorize.
    Manually_Preauthorize_2.png
  3. A slider will open. Enter the amount to be pre-authorized and click Save.

Returning the damage deposit

The remaining pre-authorized amount is voided (released) in one of four ways:

  Notes

7 day period ends

All pre-authorized amounts will be released 7 days after they are pre-authorized. Unless you manually pre-authorize the card again, the amount will stay voided.

Protection period ends

You have defined a protection period in the policy of the booked rental. If for example, you have set in this policy that the protection period ends 3 days after departure, then the pre-authorized amount will be voided accordingly.

You Void the pre-authorization

In the Damage Protection box, you can choose to manually void the pre-authorization at any point.

๐Ÿ’กNote: This option will release the hold on the funds on the guest's card.

To void the pre-authorization:

  1. Enter the booking and scroll down to the Damage Protection box.
  2. Click on the plus icon next to the transaction and select Void.Manually_void.png

You Mark as void

If you have voided the pre-authorization through your payment gateway (Stripe, Braintree, or Authorize.net), you can still mark it as voided for your own records.

๐Ÿ’กNote: This will not release the hold on the funds on the guest's card. If you select Mark as void, you will need to process the void in your payment gateway.

To mark as void:

  1. Enter the booking and scroll down to the Damage Protection box.
  2. Click on the plus icon behind the transaction, and select Mark as VoidMark_as_void.png
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