Yesterday brought a lot of confusion, and a lot more anger, for homeowners who list their vacation rentals on HomeAway and VRBO. Competing notifications from HomeAway and Yapstone, whom process payments for HomeAway, have thrown vacation rental owners into a frenzy.
HomeAway and VRBO (owned by Expedia) have been using Yapstone to process credit card payments for reservations for many years now. Yapstone charges a 3% transaction fee to homeowners for domestic transaction with higher fees for international transactions. It is unclear whether HomeAway receives a portion of credit card transaction fees, however it can be safely assumed they would reap some financial benefit from the transactions.
Recently HomeAway has been in the process of building their own in-house payment platform to process credit card transactions and drop Yapstone altogether. This in-house platform is has already been released in Europe with over 500,000 vacation rental owners using it. During a recent "glitch" at HomeAway, some homeowners were prematurely booted from Yapstone and forced into HomeAway's in-house payment platform which did not offer "Advanced Payments", meaning homeowners are forced to wait until a guest checks in before funds from payments made by guests a released. As it stands right now, HomeAway will charge, like Yapstone, a 3% transaction fee.
Why a 3% Transaction Fee?
To understand how credit cards work you need to know the process. The credit card companies charge payment processors, such as Yapstone a fee to process the credit card transaction. For larger companies who process a lot of transactions the fee they pay to the credit card companies are typically negotiated and typically can be 1.24% or lower. The processor then charges the retailers (in this case the homeowners) a higher fee than they are paying to the credit card companies. So, when Yapstone charges 3%, the difference between what they pay and what they charge is how they derive income for the company.
With HomeAway's new in-house payment system HomeAway will pay the negotiated rate, charge the homeowners 3%, and keep the profit for themselves, rather than letting Yapstone get it.
Advanced/ Early Payouts
One of the options provided by Yapstone was what they call "Advanced Payments", which HomeAway will be calling "Early Payouts." This is when funds from payments made by guests are released to homeowners soon after the guest paid. Calling them "advanced" or "early" payouts is a misnomer because you are simply receiving money you are entitled to when guests pay for a reservation. You are not receiving the money early, just timely.
Absent the "Advanced Payments" Yapstone would hold your money and only release funds once the guest has checked in.
Even though the owner the responsible party as the provider of the rental and thus should be holding all advance guest payments as a guarantee for their guests, they are prohibited from doing so and may be in violation of states laws, which vary widely.
Another issue is that guests will be checking in without the homeowner being fully paid for the reservation. If an issue arises with the credit card, or if the guests decides to do a chargeback the homeowner will not get paid and the guest will get to stay for free. Stolen credit cards would most likely not be caught in time and again, the homeowner suffers the consequences.
So What Happened Yesterday?
On August 19, 2019 HomeAway began it's initial phase of offering their new in-house payment platform to a limited number of homeowners in the U.S. This is known as beta testing, in which they use a limited number of owners to test the system and work out all the kinks. Some homeowners were invited into the new in-house payment platform with "Early Payout" and received an email from HomeAway inviting them. However, at the same time pop up boxes appeared in accounts that were not invited, to "upgrade," with no mention of "early payouts". This confused many homeowners and HomeAway has not provided a satisfactory explanation of the difference.
At the same time yesterday, Yapstone sent out emails that they have canceled their free "Advanced Payments." They are offering two choices:
The timing of this notice, which is effective immediately is an obvious attempt by Yapstone to make a money grab before they lose the contract with HomeAway when Homeaway's new in-house payment platform is fully in place. HomeAway is most likely Yapstone's largest customer and losing their business will result in a detrimental affect on their company.
As a result of Yapstone's move, HomeAway has stated they're "accelerating rolling out this feature to eligible partners as quickly as possible." They also state "Currently, the early payout program will be offered at no additional cost", meaning they are at least entertaining the idea of charging additional fees for "Early Payouts."
The events of yesterday has angered and confused many vacation rental owners. The lack of information regarding changes and the absence of advance notice have led to speculation and rampant rumors on social media platforms. We hope the explanations we have provided help you understand the evolving situation.
Here is an official statement from HomeAway regarding payments.
CHANGES TO PAYMENT ACCOUNTS
Created on Aug 20, 2019 9:45 PM
As you have seen, Yapstone, a 3rd party payment provider, has announced they’ve discontinued advanced payments as a free service, effective immediately. The advanced payments feature released funds to you soon after a traveler paid. You can read more on their FAQ page published here .
Because we know payments are critical to your business, Vrbo and Expedia Group have built an upgraded payment option for you. We have been rolling out this new payment platform over the past year, and have over 500,000 vacation rental owners using it.
Partners who move to the Vrbo payment option will get access to:
We know how much you value advance payment and have been actively working on building our early payout program on this new platform. Given the news from Yapstone, we’re accelerating rolling out this feature to eligible partners as quickly as possible. In the next 24 hours, you’ll receive an email letting you know if and when you’ll be invited into the early payment program. Currently, the early payout program will be offered at no additional cost.
We’ll be hosting a town hall next week to go through our plans in more detail and answer questions about Yapstone’s announcement and Vrbo’s new payment platform. Register here .
We appreciate your patience as we quickly work through this change together.
Yapstone has also put answers to questions in their site explaining the changes.
ADVANCED PAYMENTS FAQS
Why is Yapstone no longer offering this service?
For many years, Yapstone has provided HomeAway partners the ability to received Advanced Payments. Unfortunately, Yapstone is no longer able to offer this service for free. Until now, Yapstone has been the only vacation payment processor we know of to offer Advanced Payments at no charge. So, we have terminated the free version of the Advanced Payments service. Yapstone is, however, re-launching Advanced Payments as a fee-based service. As explained in our recent notice, we are changing from a free Advanced Payments service to a fee-based Advanced Payments service available to qualified hosts.
Why wasn’t I given more notice?
We regret that we were not in a position to afford more notice of this change. However, we have launched the new fee-based version of Advanced Payments effective from the time you select to opt-in on the email we sent you to minimize the impact to hosts.
Does my HomeAway annual subscription cover the fees for Advanced Payments?
No. Your annual subscription fees are paid to HomeAway. The Advanced Payments service is offered by Yapstone and is related to your choice to use Yapstone’s Advanced Payments feature.
I pay a fee of 3% per transaction: what does this cover?
The 3% per transaction fee, paid to Yapstone, covers the cost of credit card processing (card issuer fee, payment processing fee and card brands fee), customer support, and fraud management. The transaction fee remains the standard fee for the Check-In Payment service and does not include the Advanced Payments service offering.
What does the discontinuance of the free Advanced Payments service mean?
The discontinuance of the free Advanced Payments service means that your payments will be processed under Yapstone’s Check-In Payment service until you opt-in to the new fee-based Advanced Payments service. Click here to Opt-In. Once you opt-in to the fee-based Advanced Payments, payments we receive from your Guests will be delivered to you shortly after the time of booking. If you choose not to opt-in the payments will be delivered after the Guest checks in. Click here to Opt-In .
I don’t want to opt-in now, can I opt-in at a later stage?
Yes. So long as Yapstone is processing payments to you, you are eligible to apply for Yapstone’s fee-based Advanced Payment service.
What are the Advanced Payment fees?
Yapstone has created a low fee of an additional 3% (6% total), for the Advanced Payments service for all HomeAway customers who Opt-In to the new Advanced Payments. Click here to Opt-In .
I have a second payment due for a booking and I am not opting-in will that be on Advanced Payments?
No. Effective immediately, any payments received by Yapstone (including second installments of a booked transactions) on the free Advanced Payments service will be processed under Yapstone’s Check-In Payment service unless you qualify for – and opt-in to – the new fee-based Advanced Payments. Click here to Opt-In. If you do not opt-in, you will receive the payment (second installment) shortly after your Guest checks in instead of shortly after Yapstone receives it. If, however, you qualify for the new fee-based Advanced Payments service and opt-in to it before the check in occurs, the second payment would be accelerated under the new service.
How I do become qualified for Advanced Payments?
Yapstone will review your profile and history after you opt-in and will let you know should you not qualify to receive this fee-based product.
Does this change any of the other terms of my contract with Yapstone?
The change from a free Advanced Payments service to Check-in Payments is permitted by and consistent with the agreement between you and Yapstone. By electing to opt-in to the new fee-based Advanced Payments service, you re-affirm your existing agreement, which can be found here: Yapstone Client Service Agreement.
I have opted-in to fee-based Advanced Payments but some of my payments are showing on check-in. Why is this?
Payments made more than 12 months in advance of the check-in date are not eligible for Advanced Payments. These payments will be sent to your account after the guest checks-in.