Simplify Equipment Rental Security Deposits with Credit Card Pre-Authorizations

Security deposits protect rental businesses from damage and loss. However, collecting, holding, and returning deposits takes time and creates customer friction. Pre-authorizations offer a better way to handle security deposits by temporarily reserving funds on a customer’s credit card without charging it. This guide explains how pre-authorizations work, their benefits, and how to set them up in Booqable.

What are pre-authorizations?

A credit card pre-authorization, also called a hold, temporarily reserves funds on a customer’s credit card without actually charging it. The hold ensures the customer has enough credit to cover potential damages, but no money changes hands unless needed. Here’s a quick comparison between traditional security deposits and pre-authorizations:

Traditional deposits:

• Money leaves the customer’s account
• Manual refund processing
• Days or weeks for refunds
• Cash handling risks
• Separate transactions to track

Pre-authorizations:

• No money movement unless needed
• Automatic release of holds
• Immediate fund availability
• No cash handling
• Single transaction flow

How pre-authorizations work for equipment rental

The process for credit card pre-authorizations is straightforward. Here’s how it works for equipment rental businesses:

1. While processing a booking, you place a hold on the customer’s credit card for the security deposit amount.
2. The hold remains active during the rental period.
3. If the equipment is returned in good condition, you can release the hold immediately.
4. If there’s damage, you can capture the necessary amount from the hold to cover repair or replacement costs.

This seamless system ensures that funds are available without requiring extra steps like refunds or manual tracking.

Benefits for rental businesses

Pre-authorizations simplify security deposit management. You don’t need to manually process refunds through your bank. The holds and releases happen automatically through your payment processor.

They also reduce administrative work. Instead of managing separate damage deposit transactions, pre-authorizations integrate with your regular payment flow. The system handles everything, from placing holds to releasing them when rentals are complete.

Pre-authorizations streamline your entire security deposit process. Beyond basic automation, they offer:

• Faster reconciliation: With no money movement unless damages occur, your books stay cleaner, and audits become simpler.

• Better security: You don’t store sensitive payment data or handle cash, reducing fraud risks and security concerns.

• Flexible risk management: Adjust hold amounts based on rental history, equipment value, or customer status. For high-risk rentals, you can increase holds or reduce them for trusted customers.

Better customer experience

Customers prefer pre-authorizations because their money stays in their accounts. With traditional damage deposits, customers lose access to those funds until you process a refund. Pre-authorizations temporarily reduce their available credit. This creates less financial strain, especially for customers making multiple rentals.

Pre-authorizations give you a competitive edge. While other rental businesses make customers wait days for security deposit refunds, your customers keep their money in their accounts. This improves satisfaction and encourages repeat business.

Risk protection without the hassle

Pre-authorizations provide the same protection as cash deposits. You can still charge for damages if needed. But they remove the friction of collecting and returning damage deposits. The holds also reduce disputes. Since no actual charges occur unless there’s damage, customers are less likely to challenge legitimate damage fees. In addition, customers are notified immediately about holds, ensuring transparency and building trust.

Here are answers to some common questions about pre-authorizations:

• Insufficient funds: If a customer lacks available credit for the hold, you’ll know immediately during checkout – before the equipment leaves your facility.

• Hold duration: Most pre-authorizations last 7 days, depending on your payment processor.

• Disputes: Customers can’t dispute holds since no charge occurs. They can only dispute captured charges, which you’ll only process if damage occurs.

Setting up pre-authorizations

Setting up pre-authorizations is quick and easy with Booqable’s Stripe integration. Follow these steps:

• Connect your Stripe account to Booqable
• Configure your security deposit amounts for each product
• Booqable will automatically manage pre-authorizations through Stripe

Once connected, pre-authorizations happen seamlessly during the equipment checkout process. Booqable coordinates with Stripe to place and release holds at the correct times, so you don’t need to manage anything manually.

Making the switch

Moving from traditional security deposits to pre-authorizations through Booqable and Stripe simplifies your workflow. Start with a few test rentals to get comfortable with the system. Watch how the pre-authorizations appear in both Booqable and your Stripe dashboard.

Pre-authorizations modernize how rental businesses handle security deposits. They protect your assets while creating a smoother experience for customers. With Booqable’s Stripe integration, you get these benefits without any complexity in payment processing.