Payments in most hospitality companies are usually completed by cash, credit card, debit card, check, or other third-party arrangements. The type of settlement chosen by the customer will have a slight impact on the business cash flow.

One of the newest innovative settlement platforms introduced is the hybrid card, which targets individuals who frequently use multiple debit and credit cards for payments.

What Is a Hybrid Card?

A hybrid card is a type of card that lets its holder choose transactional settlement through a ‘pay now or pay later’ basis depending on the value or nature of their purchase. It relies on a set of payment activity margins that allows it to work as a transparent, single payment media that is connected to several accounts.

For instance, it transforms ‘pay now’ transactions into something similar to a debit card sale. Payments completed here are done via connectivity between the specified deposit of a guest or checking account and the hospitality business. Meanwhile, ‘pay later’ transactions are completed just like credit card sales.

The goal of the hybrid card is to promote the idea of combining decoupled debit technology with coupled credit technology. It follows after the hybrid payment model wherein one design is taken to improve another. This revolutionary concept is predicted to one day become an international standard.

Furthermore, the ability to combine debit and credit transaction capabilities in hybrid payments could prove to be effective and reliable in helping manage finances within the hospitality industry.

How Does a Hybrid Card Work?

Let’s consider a hybrid card that combines check and credit payment functionality within a single card. This type of payment solution can provide cardholders better control of their finances with such a capability readily available.

With this type of hybrid card, users will be able to establish their transaction preferences regarding pay now or pay later schemes based on transaction amount, merchant category, or amount and category.

For instance, cardholders could choose a site option that diverts all transactions to a specific merchant or merchant category which is to be accomplished on a pay now model no matter the dollar value. As soon as a transaction is uploaded using the hybrid card, the process will bring about instant fund transfer automatically from the deposit account of the cardholder directly to that of the merchant’s account.

An alternative option is to select a parameter that lets transactions higher than a specific amount be sent straight away to a credit card for deferred payment. This kind of specificity allows transactions that are lower than a given amount to be treated automatically as debit transactions and considered to be a pay now plan. It’s also possible to outline a combination of preferences such as having all air transportation higher than a set amount to be posted to a credit card for reconciliation.

Many hybrid card payments are being processed as credit card sales, wherein hybrid processing is applied once it has been posted as a credit card deal. The settlement would then be completed based on the preferences of the cardholder by way of an automated procedure that creates offsetting transactions that are associated with certain deposit accounts.

Preferences can be defined by customers using a web app that has been integrated by a bank on their website. Managing transactions is also possible using such applications. All cardholders are responsible for setting up and configuring their own priorities here. These hybrid card preferences are then saved on the cardholder’s account.

Additionally, the monthly statements of hybrid cardholders will include all of the transactions that have been posted to a credit card account. This is also going to include all transactions paid using connected deposit accounts. These will be separated based on the payment preference specified by the user during the configuration process.

With this kind of consolidated and accountable reporting, users can have unmatched control over multiple sources of funds and accounts. So, although a hybrid card may have similar functions just like a conventional credit card, its preferential features together with its connectivity to multiple accounts make it a different medium.

Each hybrid card account is capable of storing up to two savings accounts and three checking accounts connected for the resolution of debit payment. In case a designated deposit account lacks funds to handle a pay now transaction, this transaction will be shifted automatically for deferred payment, especially when the backup is a credit card account.

As mentioned above, cardholders are able to set their preferences for forwarding transactions to different accounts by way of the web app provided by a card-issuing bank. They could also pay based on what they feel is best for them. The great thing about a hybrid card is that checking, credit, and other deposit accounts can be used to pay, providing consumers with a collaborative and flexible financial strategy.

Benefits of a Hybrid Card Payment System

With the payment arrangements of a hybrid card designed around predetermined business rules, users can specify transaction characteristics to easily set which transactions are going to be posted to their credit cards and which would be settled using their deposit accounts.

Other benefits that a cardholder can get with a hybrid card payment system include:

  • They can obtain the benefits of both debit and credit cards without the need to carry them around.
  • They can still benefit from rewards programs for their cards whether they choose the ‘pay now’ or ‘pay later’ option.
  • They can set which transactions will be paid instantly and which ones will be posted to their accounts.
  • They have smart and total control of their line of credit while reducing their amount of debt since they can decide how, when, and what to pay with.
  • They can benefit from improved cash management since they can establish specific criteria by pre-selecting transactions as pay now or later.

Conclusion

Consumers today can make payments, track their spending, and manage their personal accounts online.

With the hybrid payment system, such as with the hybrid card, they can have a specialized type of credit card that will allow them to choose a pay now or pay later payment scheme depending on their predetermined configuration.

Payconiq is experienced in providing a variety of value-added services to merchants and end consumers. Hybrid payment systems are one of them.

Contact us today to find out how you can leverage these payment methods.

References:

https://www.atlantafed.org/-/media/documents/news/conferences/2008/08-payments-econ-03/epconfwillison.pdf

https://www.hospitalityupgrade.com/_magazine/magazine_Detail.asp/?ID=548

https://www.payconiq.com/

https://www.milbank.org/2021/05/primary-care-payment-reform-go-hybrid/

https://www.hmpgloballearningnetwork.com/site/frmc/content/understanding-hybrid-payment-models-managed-care-evolves