How Security Deposits Work

Security deposits protect your property if a guest damages something during their stay. The process is simple in most cases. The guest checks out, the property is inspected, and the deposit is released. The exact process depends on where the booking comes from. Airbnb handles this differently from VRBO and direct bookings.

Below is how security deposits work in normal situations and what happens if damages occur.

The Happy Path. No Damages

99 out of 100 reservations follow this path. The guest checks out and the property is left in good condition. The deposit is never charged.

Airbnb

Airbnb does not place a traditional security deposit hold on the guest’s card. Instead, Airbnb uses AirCover for Hosts. AirCover provides protection for hosts if damage happens during a stay.

Key points:

• No deposit hold appears on the guest’s credit card.
• No money is reserved or charged during the stay.
• Protection is handled through Airbnb’s claims system.

If the property is in good condition after checkout, nothing happens and the reservation simply closes.

VRBO / HomeAway

VRBO works more like a traditional security deposit system.

A card authorization hold is placed on the guest’s credit card.

Example:

Security deposit: $750

How it works:

1. The guest books the property.
2. A $750 authorization hold is placed on the card.
3. The bank confirms the funds are available.
4. No money actually moves.

After checkout and inspection, the authorization hold is released.

Important details:

• The hold is temporary.
• The guest is not charged.
• The hold expires automatically if unused.

Stripe fees

There are no Stripe processing fees if the authorization is released.

Stripe only charges fees when money is actually captured.

Direct Bookings

Direct bookings follow the same process as VRBO.

A deposit hold is placed through Stripe authorization.

Example flow:

1. Guest books through the website.
2. Stripe authorizes a $750 hold.
3. Guest checks out.
4. The property is inspected.
5. The hold is released.

If the deposit is released, there are:

• No charges
• No Stripe fees

The Not-So-Happy Path. Damages

Sometimes damage happens during a stay. When that happens we need to recover the repair cost.

The process depends on the booking channel.

Damage Claims on Airbnb

Airbnb damage claims go through the Resolution Center.

Typical process:

1. Damage is discovered during cleaning or inspection.
2. Photos and documentation are collected.
3. A claim is submitted through Airbnb.

Airbnb then contacts the guest and asks them to approve the payment.

If the guest refuses, Airbnb reviews the case. If the claim qualifies, Airbnb may reimburse the host through AirCover.

Important points:

• The host cannot charge the guest card directly.
• Airbnb manages the payment process.
• Claims require documentation such as photos or invoices.

Damage Claims on VRBO and Direct Bookings

VRBO and direct bookings are simpler because the deposit is already authorized.

If damage occurs:

1. The property is inspected after checkout.
2. The repair cost is estimated.
3. Part or all of the deposit is captured.

Example:

Security deposit authorized: $750

Damage cost: $200

We capture $200 from the authorization and release the remaining $550.

Stripe processing fee

If money is captured, Stripe charges a processing fee.

Example:

Captured damage: $200

Stripe fee:

2.9% × $200 = $5.80

+$0.30 transaction fee

Total Stripe fee: $6.10

Stripe fees only apply to the amount captured.

We don't charge commission on captured damage funds, but pass payment processing fees to the owners.