how travel payments are transforming the industry

Transforming travel

paymentsWebinar

7 & 9 May, 2013

K

Kevin MayEditor & Moderator

Gene QuinnCEO & Producer

Your hosts

K

Jason HancockHead of ChannelDevelopmenteNett International

Your panelists

Luis YofeSr. Business LeaderTravel PaymentsMasterCard

Copyright © 2013 eNett International (Singapore) Pte Ltd. Confidential and Proprietary

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Copyright © 2013 eNett International (Singapore) Pte Ltd. Confidential and Proprietary5

AGENDA

INTRODUCTION TO THE RESEARCH STUDY

KEY TRENDS

A CASE FOR VIRTUAL CARDS

THE TRUE COSTS OF PAYMENTS

CONCLUSION


RESEARCH INTRODUCTION

Jason Hancock

Head of Channel Development, eNett International


SURVEY SAMPLE REPRESENTATIVE OF THE GLOBAL TRAVEL INDUSTRY

Industry Segment Geographic Region

TOTAL SAMPLE = 1,523 QUALIFIED SURVEY RESPONDENTS

Source: PhocusWright’s Payment Unsettled – Cost, Opportunity and Disruption in Travel’s Complex Payment Landscape


COVERING A BROAD RANGE OF RESPONDENT SIZEDISTRIBUTION BY GROSS TRAVEL BOOKINGS IN 2012



AND FROM A VARIETY OF INDUSTRY FUNCTIONSDISTRIBUTION OF RESPONDENTS BY FUNCTIONAL AREA



KEY TRENDS

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TAKING STOCK OF THE CURRENT TRAVEL PAYMENTS LANDSCAPESUPPORTED PAYMENT METHODS – ALL RESPONDENTS



KEY RESEARCH TRENDS

Trend 1: Credit cards continue to reign supreme

Trend 2: A shift towards full payment at time of booking (and dynamic content)

Trend 3: An increase in direct relationships between retailers and suppliers

Trend 4: Desire for increased payment automation

Trend 5: The need to operate in an increasingly globalised market

Trend 6: The rise of mobile

How well do conventional payment methods support these trends, and what role do emerging / alternative payments have to play in the future?


A CASE FOR VIRTUAL CARDS

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TREND 1: CREDIT CARDS CONTINUE TO REIGN SUPREME

Airline Website Payment Methods Agency Payment Methods

U.S. AIRLINE PASSENGER REVENUE – PAYMENT METHOD BY CHANNEL



TREND 1: CREDIT CARDS CONTINUE TO REIGN SUPREME

Hotel Website Payment Methods(1)

Hotel Direct Offline Channel Payment Methods(2)

GLOBAL HOTEL GROSS TRAVEL BOOKINGS – PAYMENT METHOD BY CHANNEL

(1) May include both pre-paid bookings and reservation guarantees (post-pay)(2) Multi-select



TREND 2: PAYMENT AT TIME OF BOOKING

Share of Hotels offering pre-paid options on their website

Expectations of future growth of pre-paid versus post-pay

MAJORITY OF HOTELIERS EXPECT PRE-PAYMENT METHOD TO INCREASE



TREND 3: INCREASE IN DIRECT SUPPLIER RELATIONSHIPS


TREND 4: DESIRE FOR INCREASED PAYMENT AUTOMATIONVIRTUAL CARD CRITERIA MOST IMPORTANT TO TRAVEL COMPANIES

40% of agencies believe virtual cards can increase efficiency through GDS integration



TREND 4: DESIRE FOR INCREASED PAYMENT AUTOMATIONINTEGRATION OF ENETT VANS INTO THE GALILEO GDS (FOCALPOINT & SMARTPOINT)

2. Request a VAN by clicking the eNett icon or entering the #VAN command in the terminal window

3. VAN Request screen pops-up with booking details pre-populated. Simply

check the details and enter your password to generate your VAN

4. All booking and payment details are

written back into the GDS

#VAN

1. Make your booking in the GDS


TREND 5: OPERATING IN GLOBALISED MARKETSMANAGING CROSS-BORDER AND FOREIGN CURRENCY ISSUANCE & ACCEPTANCE

Source: PhocusWright’s Payment Unsettled


THE TRUE COSTS OF PAYMENTS

Luis Yofe

Senior Business Leader, Travel Payment Solutions,

MasterCard Worldwide


TAKING A WIDER VIEW OF COSTS…

Cost 1: The obvious surcharge cost

Cost 2: Manual payments handling and reconciliation

Cost 3: Ensuring that risks don’t become costs

Cost 4: The cost of breakage and unpaid commissions

Cost 5: Cutting the costs of payment delays

How well do conventional and emerging / alternative payment methods compare when all these different types of costs are considered?


COST 1: THE OBVIOUS SURCHARGE COSTCHARGING SURCHARGES FOR MAKING BOOKINGS OR USING A PAYMENT METHOD



(1) Gross Annual Travel Bookings(2) Based on and average travel consultant salary of US$15 per hour


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COST 2:MANUAL PAYMENTS HANDLING & RECONCILIATION

40% of agencies typically settle through direct billing

and manual payment processes

Size of Travel Organisation(1) $1M-$25M $25M-$100M More than $1B

Staffing 2 10 16

Weekly Hours per Staff 21 24 27

Estimated Weekly Cost (USD)(2) $630 $3,600 $6,480


COST 3:ENSURING RISKS DON’T BECOME COSTS

39% Of agencies rate

credit card fraud a major payment issue

53%

Choose virtual card technology to reduce

risk of fraud and supplier default

>50%Are not aware if their

payment or travel systems comply with

the Payment Card Industry Data

Security Standard (PCI DSS)



COST 4:BREAKAGE & UNPAID COMMISSIONS

43% of airlines, 50% of hotels and 53% of wholesalers have experienced unpaid agency bookings

10% hotel commissions lost for 20% of agencies



COST 5:CUTTING THE COST OF PAYMENT DELAYS

#2 concernLength of time

between payment and invoicing

3 out of 4Say payment via cards

and EFT are settled within 2 days

4 weeksTypical settlement time

for resellers paying suppliers



SUMMARY

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IN SUMMARY…

The Travel payments landscape remains complex and fragmented, however traditional payment methods continue to dominate

PhoCusWright’s research, Payment Unsettled, indicates the following trends A shift towards more direct supplier relationships,

Increase in pre-payment,

Globalisation

Increased payment automation

The rise of mobile

To accommodate these changes, adoption of emerging payment methods will likely to increase since they can provide a solution to some of the key issues

The travel industry should take a wider view when considering the overall cost of payments - conventional or emerging - as these go well beyond the obvious


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Transforming travel payments…

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Q & A

K

Thank You!

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how travel payments are transforming the industry

Business

prepayment method

conventional payment

prepaid bookings

credit cards

suppliers trend

supreme trend

prepaid options

dynamic content trend