When paying for hostels is it similar to paying for hotels in the US? Do you finalize the payment upon checkout? Or is it customary to pay when you check in?
In a lot of the hostels I have stayed at, they would ask at check-in if paying by cash or credit card. If by credit card, the card is swiped at check-in and the final charge not billed until last day (similar to any U.S. hotel). If paying by cash, typically wanted the money paid up front or a credit card number to be billed in event attempt made to skip out on paying (again, similar to any U.S. hotel swiping a major credit card to ensure you pay up if you disappear or chug a bunch of mini-bar whisky bottles 5 minutes before check-out). Note that some European hostels will also ask for your passport at check-in and make a copy of it or write down the information from it. This is perfectly normal.
The non-big city hostels don't give a rat's rear bumper when you pay. It's more of when the cash drawer happens to be open and the money-taker is around. I've never stayed in one that took credit cards as far as I know.
I can't recall ever using a credit card. My hostel stays are usually one night and it seems like I generally pay cash when I check in.
Maybe Ed looks more honest and trustworthy than me, because even at the tiny little hostels that I stayed at that did not accept credit cards at all (assume they don't want to pay the merchant fee associated with running cards, or like having a cash-only business so they can be creative when it comes to paying taxes), it was always "Ok, pay up in full now. And if you decide later you want to extend your visit here and keep the bed for another night, then let us know before your check-out time and pay up front for the extra night(s) or we won't guarantee you'll have a place to sleep."