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Creating & Managing Damage Deposit Pre-Authorizations (Automated & Manual)

Victor
  • Updated

A pre-authorization (pre-auth) or credit card hold allows you to temporarily hold a specified amount on a guest's credit card to cover potential incidental charges or damages. This hold reduces the guest's available credit but does not immediately withdraw funds.

Hostaway supports both Automated and Manual pre-authorizations for connected Stripe and Authorize.net accounts (Braintree is not supported).

 

1. Important Rules & Processor Behaviors (Must-Read)

Before setting up pre-authorizations, please keep these critical processor rules in mind to avoid unexpected card releases or financial issues:

  • Expiration Timeframes (Non-modifiable):
    • Stripe: Holds automatically expire and release back to the guest’s card after 7 days from creation.
    • Authorize.net: Holds expire after 30 days.
  • Stripe Auto-Renewal Schedule: For reservations longer than 7 days, Stripe users can enable an automatic renewal schedule. Hostaway will automatically place a new hold as the previous one is about to expire.
    • Note for Guests: During a renewal, guests might temporarily see two pending authorizations on their card statement until the bank releases the old one.
  • One-Time Capture Rule: You can capture the held amount fully or partially. However, capturing can only happen once. If you do a partial capture (e.g., holding $500 but capturing only $150), Stripe will immediately and permanently release the remaining $350 back to the guest.
  • Reporting: Captured security deposits are currently not reported in Financial Reporting, the Reservation Financial Breakdown, or inside the Guest Portal under Invoices & Receipts.

 

2. Option A: How to Create an Automated Pre-Authorization

Automated pre-authorizations are set up via your payment templates to apply automatically based on reservation timelines.

Step 1: Set up the Deposit Fee on the Listing (Recommended)

  1. Go to Listings > Select your listing > Click Edit.
  2. Navigate to the Price & Fees tab.
  3. Locate the Refundable damage deposit fee field and enter your desired amount.
  4. Click the Gear icon next to the field to open advanced settings.
  5. Check the box "Exclude from total". This ensures the hold does not impact your revenue reporting and prevents unnecessary transaction fees.
  6. Choose if you want to export this value to Airbnb (optional).
  7. Click Save & Export.

Step 2: Configure the Auto-Payment Rule

  1. Go to Reservations > Guest Payments > Auto-payments.
  2. Click Add auto-payment (to create a new template) or select an existing one.
  3. Under the Auto Charges section, click Add auto charge. 

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  4. Set the Type to Pre-authorization.
  5. Enter a Title (e.g., "Security Deposit Hold").
  6. Set the Amount. You can select "Refundable Damage Deposit" to automatically pull the value from the listing settings.
  7. Choose the Payment Method (e.g., Stripe).
  8. Configure the Schedule:
    • Strategic Advice: Schedule this to trigger "1 day before check-out" or "X hours before check-out" to ensure the 7-day Stripe hold covers the stay and potential damage inspection time.
  9. (For Stripe Users): Toggle Enable Renewal of Pre-Auth to "ON" if the stay is longer than 7 days.
  10. Click Save.

 

3. Option B: How to Create a Manual Pre-Authorization

Manual holds are ideal for last-minute bookings or when you need to secure additional funds on the fly.

Method 1: From the Guest Payments Page (Centralized)

  1. Go to Reservations > Guest Payments > Charges.
  2. Click the Add Transaction button at the top.

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  3. In the Type dropdown, select PreAuthorization. 

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  4. Select the specific Reservation from the list.
  5. Enter the Amount (Note: must be equal to or less than the total booking amount).
  6. Select Payment Link as the payment method to securely request card details. 

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  7. Click Add Pre-Authorization.

Method 2: From the Specific Reservation Page

  1. Go to Reservations and select the guest's booking.

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  2. Scroll down to the Guest Payments (formerly Invoices and Charges) section.
  3. Click the Add Transaction button. 

    35.png
     
  4. Follow the same steps (3-7) as Method 1 to complete the hold.

Finalizing the Manual Hold

Once created, the transaction will appear in the Charges list with the status "Awaiting hold". 

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  • Important: You must share the generated Payment Link with the guest. The hold will only be triggered once the guest provides their card details through the link.

 

4. How to Capture or Release a Hold

When the payment processor successfully secures the funds, the status in Hostaway will update to holdSuccess.

To Capture (Charge for Damages):

  1. Locate the transaction in Reservations > Guest Payments > Charges or within the specific reservation.
  2. Confirm the status is holdSuccess.
  3. Click the three dots (...) at the end of the row and select Capture now. 

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  4. A pop-up will appear. Enter the Amount to capture (can be partial or the full amount). 

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  5. Click Update.
    • Crucial Warning: Capturing is a one-time event. If you capture less than the full amount, Stripe automatically releases the remaining balance back to the guest immediately. You cannot perform a second capture on the same hold.

To Release (Return Funds):

  • If you do not capture the hold, it will automatically release on its own after 7 days (Stripe) or 30 days (Authorize.net).
  • If you want to release the funds earlier, you can cancel the charge line from the reservation details or directly within your Stripe dashboard.

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