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I've raised the same issue, as cash on arrival/returned on departure doesn't work for self-catering where there is too much to check as a guest is leaving, and very risky for owners (especially if there were to be a dispute)
I've had various responses (all contradictory) to my query. I may try the automated message/card payment option, but would be much better is booking.com just said that the owner will advise how to pay the damage deposit, rather than say it's taken in cash, then have us contradict that by asking for card payment or bank transfer (which is not a very safe way for a customer to pay the deposit)!
Also - what happens if the guest won't pay the deposit? Assume as that's a condition of booking, it can then be cancelled?