Credit card hold or deposit: which one to ask for

A venue that wants protection against no-shows has two main tools: a credit card hold and a deposit. Both ask for a card at booking. Both let the venue recover something when a guest does not turn up. To the venue, they can look like two versions of the same thing. To the guest, they feel very different, and that difference decides how many guests complete the booking.

A deposit takes money now. A credit card hold, in the sense most venues use the term, takes card details now and charges nothing unless the guest breaks the cancellation policy. For a guest deciding whether to book, the first feels like paying for something that has not happened yet; the second feels like a promise. That is why a hold often wins both the booking and the protection, while a deposit protects the venue but loses some of the guests who would have come.

This guide explains what each one is, how guests experience them, when each suits a venue, and how to set either up so that it protects the tables without driving guests away. Every figure in it is an example.

A deposit is a payment taken at the time of booking, usually deducted from the final bill. If the guest cancels within the policy, it is refunded; if they do not turn up, the venue keeps it. Some venues take a deposit per head, some a fixed amount per booking, and some take full prepayment for set menus or events.

A credit card hold usually means one of two things. Sometimes it is a stored card: the venue keeps the card details securely through its payment provider and charges a no-show fee only if the guest breaks the policy. Sometimes it is a true authorisation hold: an amount is reserved on the card, not taken, and released after a set time. Wikipedia's article on authorization holds explains how the second kind works on the card networks. In both cases, the guest pays nothing unless they fail to turn up or cancel too late.

Our guide to deposits vs credit card holds for bookings compares the two side by side. Here the focus is on choosing between them.

The guest's experience is the heart of the choice.

A deposit asks the guest to pay money they may never get back if their plans change, before they have eaten anything. For a regular who knows the venue, that is a small thing. For a new guest booking on a phone after seeing an Instagram post, it is a moment of doubt: is this venue worth paying for in advance? Some will decide it is not, and book somewhere that does not ask.

A hold asks for card details and a promise. Nothing leaves the guest's account if they keep the booking or cancel in time. Most guests who intend to come accept it easily, because it costs them nothing to do what they were going to do anyway. The friction is lower, and the protection is real for the guests who do not turn up.

For most ordinary bookings, a credit card hold gives the venue two things at once.

It keeps the booking. Because nothing is charged up front, fewer guests give up at the card step than they would with a deposit. Our guide to booking abandonment explains why every extra step at the end of a booking loses some guests, and a payment is a larger step than a promise.

It changes behaviour. Guests who have given card details against a stated no-show fee are more likely to cancel properly if their plans change, because they know a fee is possible. Many venues find the main benefit of a hold is not the fees they charge but the cancellations they receive in time to re-let the table.

A deposit makes more sense in some situations.

In these cases, the venue's loss from a no-show is high enough, and the guest's commitment strong enough, that a deposit's extra friction is worth it. Our guide to reservation deposits covers deposits in more detail.

At the far end is full prepayment: the guest pays the whole price when booking. It is common for ticketed events, tasting menus with a fixed price and some special occasions. It removes no-shows almost entirely, because guests rarely abandon an evening they have paid for, but it suits only formats where the price is known in advance and the guest expects to pay that way.

For an ordinary à la carte booking, prepayment is rarely appropriate. Guests do not know what they will order, and asking them to pay before they have chosen feels odd.

Many venues use different tools for different bookings rather than one for everything. A common pattern:

This keeps the ordinary booking quick for most guests while protecting the bookings where a no-show costs most.

A hold or a deposit only protects the venue if there is a clear policy behind it: how much notice a guest must give to cancel without charge, and what is charged if they do not. The no-show fee should be stated in money, not in vague terms, and it should be proportionate to the venue's likely loss.

Show the policy before the guest gives their card, in plain words, and repeat it in the confirmation and the reminder. Our guide to writing a cancellation policy guests accept covers the wording, the notice period and where the policy must appear, and our guide to charging a no-show fee without the bad review covers what happens when you actually charge.

However you protect bookings, explain it briefly and in the guest's terms, at the point where the card is asked for. Compare these:

The second is longer and far more reassuring, because it tells the guest exactly what will and will not happen. A guest who understands the policy is more likely to accept it and less likely to dispute a charge later.

Regulars deserve thought. A guest who has booked twenty times and never missed a booking may be irritated to be asked for a card, and a venue that treats its best guests like strangers sends the wrong message.

Where your booking system recognises returning guests, consider asking them for a card only on the nights and party sizes where everyone is asked, or not at all. Where it does not, keep the card request to the bookings where the risk is real, so regulars booking an ordinary table on an ordinary night are not affected.

A true authorisation hold does not last forever. The card networks and the guest's bank release reserved amounts after a period, which varies. For bookings made weeks in advance, a hold placed at the time of booking may have lapsed by the night itself.

That is one reason many venues store the card securely through their payment provider rather than placing a hold at booking, and charge only if the policy is broken. Ask your payment provider how its holds and stored cards work, and set up the process around that rather than around an assumption.

When a guest with a held card does not arrive, follow the same steps every time. Hold the table for the grace period stated in your policy. Call or message the guest before releasing the table. Release it to a walk-in or the waitlist if they do not answer. Note the no-show on the booking.

Then leave the decision about charging until the next day, when someone can look at the guest's history and any message they sent. Our guide to charging a no-show fee without the bad review covers that decision and the message that goes with it.

The host and the floor team will be asked about the policy by guests, often on the phone. Make sure they can explain it in one or two sentences, in the same words as the booking page: what is held, when it is charged, and how much. A team that understands the reason for the policy explains it warmly; one that does not makes it sound like a penalty.

Both tools have costs. Card payments carry processing fees on any amount charged. Deposits that are refunded may carry fees on both the charge and the refund, depending on the provider. Holds that expire cost nothing, but managing card details requires a payment provider that stores them securely; card data should never be written down or kept outside a proper payment system.

There is also the cost in lost bookings: the guests who would have come but gave up at the card step. That cost does not appear on any invoice, which is why it is easy to forget. Weigh it against the no-shows the tool prevents.

Before introducing a hold or a deposit, measure your current no-show rate by booking type and by night. Our guide to measuring your no-show rate explains how. Then, after introducing it, measure three things:

An invented example: a venue with a 10 per cent no-show rate on Friday and Saturday introduces a card hold on those nights. The no-show rate falls to 3 per cent, online bookings fall slightly at first and recover, and late cancellations rise as guests let the venue know. The tables re-let from those cancellations more than make up for the few bookings lost.

To see how the choice plays out, take an invented restaurant's Saturday evenings. It takes about 120 online bookings a month for those nights, averaging three guests at 40 a head, and around 12 of them are no-shows: 10 per cent.

With no protection, those 12 no-shows leave tables that are rarely re-let at short notice, costing perhaps 1,400 of sales a month.

With a credit card hold and a policy of 15 per guest for late cancellations and no-shows, suppose a few guests give up at the card step and online bookings fall slightly, while no-shows fall to around 4 a month and late cancellations rise as guests let the venue know. Several of those cancelled tables are re-let from the waitlist. Sales lost to no-shows fall sharply, and the fees charged recover a little more.

With a deposit of 20 per guest instead, no-shows fall further, but more guests give up at the card step, especially new ones booking on a phone, and the regulars notice. Whether the deposit beats the hold depends on how many bookings it loses. For most ordinary nights, the hold wins; for New Year's Eve, the deposit probably does. The figures are invented; the method of comparing is the point.

When you introduce a hold or a deposit, apply it to new bookings only. Guests who booked under the old terms agreed to those terms, and changing them afterwards is unfair and, in many places, unenforceable.

Tell regulars about the change before it affects them, in a short, friendly message that explains why and when it starts. A regular who hears about the change from you, with the reason, takes it far better than one who meets it unexpectedly at the card step.

If you are unsure, start with the bookings where a no-show hurts most: large groups and your busiest nights. Introduce a card hold there, with a clear policy, and measure the effect for a month or two. Extend it only if it works, and consider a deposit only where holds are not enough.

Avoid introducing deposits for every booking at once. It changes the experience for every guest, including regulars who have never failed to turn up, and it is much harder to undo than to extend gradually.

servearound does not take deposits, store cards or charge no-show fees today; deposits are coming. What it does now helps with the other half of preventing no-shows: making the booking easy to keep and easy to cancel.

Every booking made on your booking page gets a confirmation email with a link to change or cancel, and the booking rules let you send a reminder email a set number of hours before. Staff can mark a booking as a no-show, and analytics shows no-shows and the no-show rate, so you can measure the problem by night before deciding whether holds or deposits are worth it. See the reservations module.

A deposit takes money at booking, usually deducted from the bill. A card hold takes card details, or reserves an amount without taking it, and charges only if the guest breaks the cancellation policy.

Most guests prefer a hold, because nothing is charged if they keep the booking or cancel in time. A deposit asks them to pay before they have eaten, which puts some off.

For large groups, set menus and events, special dates and very small venues where one empty table costs a lot.

Often, yes, partly through the fees charged but mainly because guests with a stated fee are more likely to cancel properly in time.

Enough to reflect the venue's likely loss from an empty table, stated clearly in money, and not more. Check the rules on fair terms where you trade.

Usually not for ordinary bookings. Many venues ask for cards only on busy nights, for large groups or for special dates.

Card processing fees on amounts charged, the cost of a payment provider that stores cards securely, and some lost bookings from guests who give up at the card step.

Bookings paid in full at the time of booking, common for ticketed events and fixed-price tasting menus, rarely suitable for à la carte dining.

Most guests who intend to come accept it readily, especially when the policy is explained in plain words and nothing is charged if they keep the booking.

Not always. Some venues place a pre-authorisation that reserves an amount on the card; others simply store the card securely and charge only if the policy is broken. Your payment provider will explain which it offers.

Often, yes. Special dates such as New Year's Eve justify a deposit or prepayment, a longer notice period and a higher charge, because every table is in demand and no-shows cannot be filled.

Only through a secure process your payment provider supports, such as a payment link sent to the guest. Never write card details down or take them in an unsecured way.

Stored cards usually do. True authorisation holds may lapse before a distant booking date, so check how your payment provider handles them.

Before the guest gives their card, in plain words, and again in the confirmation and the reminder.

A deposit takes money at booking; a credit card hold takes card details or reserves an amount, and charges only if the guest breaks the policy. Guests feel the difference: a hold is a promise that costs nothing if they come, a deposit is a payment before they have eaten. That is why a hold often keeps the booking and still protects the table, mainly by making guests cancel in time.

Use deposits or prepayment where a no-show costs most: large groups, set menus and events, special dates and very small rooms. Show a clear policy with the fee in money before the card is asked for, keep card details in a secure payment system, start with the bookings that matter most, and measure no-shows, completed bookings and timely cancellations before extending it.