What issues are affecting the online travel industry’s approach to payments?

The travel industry likes a clear ROI and this is why taking payments online more effectively (and potentially more cheaply) is so vital for the continued growth of online travel sales.

Published: 26 Feb 2009

The travel industry likes a clear ROI and this is why taking payments online more effectively (and potentially more cheaply) is so vital for the continued growth of online travel sales.

With the credit crunch biting, airlines, hotels and intermediaries are looking at how they can further reduce costs and sharpen their competitive edge. Edgar, Dunn and Company estimated that the airlines alone spend US$1.5 Billion on taking credit card payments so for the whole travel industry the potential savings are truly massive.

A whole host of payment providers are now targeting the travel business and it's not just the trend to drive cheaper debit card payments over credit cards. It's branded payments cards, echecks, air mile bartering, wire transfers, corporate payment mechanisms and CHAPS (ACH for the USA) that are offering savings for businesses and convenience for customers.

Alternative payment systems such as CashTicket are potentially a win-win product for your company, a wider range of potential online customers, transaction savings and increased conversions. But to make your payment system pay for itself in you need to look at this carefully in terms of credit card penetration within your core customer set, payment legislation and cultural payment trends. Your products and your markets all have to be seen within these contexts.

Taking high value payments over mobile is also a major factor in the development of mobile as a viable commercial platform. The industry will only invest massively in mobile when it sees money coming in from that channel. The existing low value sales of ring tones and games just do not equate to flights and holidays so alternatives have to be found. They do exist - the simplest currently being call me buttons, though this does require 24 hour telesales or sign up payment systems and can be customer unfriendly and unsuitable for the modern day non-loyal customer.

The issue of who is to take the risk when it comes to payment fraud - the travel industry or the payment provider - is also a contentious one which hinders development. You have to ensure you are doing all you can to minimise loses and maximise consumer trust. You cannot ignore the figures. Up to 16% of your customers do not feel secure paying on your website and over £300 million is being lost by airlines to fraud!

Through changing the way you take payments you can boost your profitability but it also can have an impact on:

  • How, and even if, your customers still buy from you, especially in emerging markets and European countries where cc are not the favoured method of payment
  • It can change the channels your customer buys your product through, so impacting on your costs
  • The amount of payment providers you have to negotiate and work with
  • Your organisations security - fraud companies are queuing up to lessen your risks but which ones work
  • Your organisations proven regional payment methods
  • Establish revenue generating payment methods - branded cards, airmiles etc
  • Revenues - some airlines make large amounts of money by taking online payments. There are consumer rumblings so the customer may not accept this forever especially the issue of when the payment costs are shown in the buying process
  • These and other issues will be debated by the travel industry this May 19-20 in London.

    Confirmed speakers are:

  • Chris Amenechi, eCommerce & Distribution Planning, Continental Airlines
  • CFO or COO, SkyTours
  • Marian Madara, eCommerce Specialist, SkyEurope
  • Martin Shields, Senior Manager Ecommerce, Visa International
  • Meta Backman, Corporate Security, Finnair
  • Odd Langvatn, Managing Director, Wideroe Internet AS
  • Sue Conroy, Fraud Prevention Manager, Eurostar
  • Norbert Krawczonek,eCommerce Specialist,Lot Airlines
  • Ken Muir, Global Payments Manager, BA
  • Jeremy Acklam, Business Development Director, thetrainline.com
  • Peter Warner, Payment Systems Consultant, First ondemand
  • Wim Kruit, Online Payment, Transavia
  • Diane Steed, Head of Sales & Marketing, Institute of Travel Management
  • David Hunter, UK CEO, Prepaid Services Company Ltd. (Cash Ticket)
  • To see an agenda go to http://events.eyefortravel.com/tds/online-travel-payment/agenda.asp

    Or call Tim Gunstone on +44 (0) 207 3757557

    Tim Gunstone
    MD, Eyefortravel Ltd.
    tim@eyefortravel.com
    +44 0207 3757557

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