Travel companies are starting to wake up to the importance of virtual payment technology.
That’s according to Jim Pratt, senior vice-president and general manager, virtual payments global at WEX Inc, who says they are now beginning to see the technology as more strategic than in the past; and it’s not just about acceptance, it’s about making payments too.
The global tourism industry is undergoing upheaval. Disruption from outside, as geopolitical issues and terrorist attacks continue; and within, as the likes of Uber and Airbnb gain market share and even more publicity. Then we have low-cost revolution 2.0, with airlines including AirAsia X, Norwegian and IAG’s Level set to repeat what Ryanair and easyJet did decades ago, flying further and cheaper than ever before.
“There’s no doubt there’s a low-cost revolution. The world has been getting smaller for 20 years, and now just got smaller,” Pratt believes. “These two huge cohorts of travellers want to go further. Enter the low-cost revolution. It’s opening up emerging markets, such as Asia, but also access for them to access cities such as London. It’s great for travel, and great for emerging economies. The low-cost carriers aren’t going to stop.”
However, Pratt adds that while a destination’s popularity will fall and rise, overall tourism is continuing to grow, at about 5% per annum. “None of it is affecting travel”, he says. “There’s the same number of travellers, so the impact on travel firms is they’ve got to be as nimble as ever, they need to be able to switch. The result? Travel sellers now need to sell holidays further afield, in more exotic places, and also need to react quickly as destinations rapidly fall in and out of favour. Virtual payments can play a part in all of this, Pratt argues.
“Virtual payment technology is part of the solution. If you want to switch from France to Thailand for example, you don’t have to worry about payments.” Pratt can talk with authority on such subjects. WEX was founded in 1983, with Pratt joining in 1998, “hired to create virtual cards – but they weren’t called that at the time”, he notes.
"In places like India and China, they leapt ahead... The UK has already had enormous investment in its hardware. India and China didn’t spend decades building out the infrastructure for tap and pay."
“We’ve been doing this since 2000, initially as part of working with OTAs, and their e-commerce. As the OTAs became bigger, the hotel chains got onboard. They were the first to get onboard [with virtual payments] in 2005-06. The hotel were saying they didn’t want to deal with cheques.
“Virtual gives the ability to make smaller travel agencies more competitive. If you’re small, if you’re booking a hotel in a remote region, they want some guarantee of payment. If they have virtual cards at their disposal, once you get authorised that’s as good as money in the bank. We can help small agencies make payments over borders and seamlessly without friction."
X marks the spot
And it’s those words “seamless” and “frictionless” that continue to be buzzwords at travel conferences up and down the country, often appearing in the same sentence as Uber and Airbnb, which are proclaimed as the gods of user experience.
While these two organisations can be perceived as sitting with the travel and tourism sectors, they are simply technology companies that have excelled in simplifying processes for the end user. Yet many travel companies fall short in adopting these high standards. It’s not that the message is failing to filter down; when it comes to payments, part of the problem is the UK’s reliance on existing infrastructure, as well as the fragmented nature of the travel industry.
In March, eNett published its Payments that Power Experience Report. It stated: “One-click payments, contactless services and direct mobile billing have revolutionised payments in many B2C industries, but B2B payments in the travel sector are often still handled manually.”
It urges companies to focus on their financial and operational processes to free up employees to spend more time with customers. The report also explored how improvements in customer experience (CX) can drive business performance, citing a study it commissioned by CX consultants Smith+Co. It believes that improving customer experience directly impacts business performance, with a 5% increase in customer loyalty able to boost profits by up to 85%.
Research firm Forrester also found a one-point gain in the Customer Experience Index translated into extra revenue worth $65 million for an upscale hotel chain, the eNett report added.
“Virtual payment technology is part of the solution. If you want to switch from France to Thailand for example, you don’t have to worry about payments."
“From the beginning, we set off to make payments easier to process,” says Anthony Hynes, eNett managing director and chief executive. “There’s been some mutual learning processes. As we started to build some of that, and looking not just in payment space, we’ve seen how CX has driven change in the way we shop and more. The likes of Uber have totally changed the game. One click solved other key issues – like not waiting on hold, or the cab refusing to take you a short distance. These are simple things nowadays, but before were frustrating frankly.”
But incorporating this is easier done than said. In Asia, streetfood vendors are accepting payments via apps such as WeChat Pay. In the west, it’s our so-called “advanced” infrastructure that is actually hindering development.
Food for thought
“In places like India and China, they leapt ahead,” Hynes argues. “The UK has already had enormous investment in its hardware. India and China didn’t spend decades building out the infrastructure for tap and pay. Developing countries have an advantage, as they always get the newest version of things. They create something new. “Consumer demand for digitisation is on a vertical curve. Those who don’t provide seamless capability will fall behind.”
Meanwhile, fragmentation in travel makes it more difficult, as brands need to instil a high level of confidence. Amazon, for example, spent years mastering one-click payments. Hynes continues: “Brands like Booking.com and Agoda have enough brand loyalty to enable the one-click experience. In Europe every country has its own payment systems, for example Carte Bleue in France.”
“The concept of virtual cards in the travel space is becoming more broadly known and accepted,” adds WEX’s Pratt. “We’re looking to see how we can make B2B payment more efficient. We wouldn’t develop a blockchain system, as the customer would say ‘you’re not making things easier’.
“In our research and development department, we ask what’s the adoption in each region, in each sector? We may offer travel firms a technology that looks different to a virtual card, but is a virtual card.”
Meanwhile, with social media and messaging app payments on the rise in Asia, eNett’s Hynes believes UK travel companies should take note. “As China’s population becomes more mobile, they’re going to want to take those experiences with them.” He says eNett can act as an “international translator” so a WeChat user pays for a hotel with WeChat Pay, for example, yet the hotel is receiving a VAN (a one-off eNett virtual account number).
“What Dusit is doing is terrific,” Hynes adds, referring to the hotel group’s move to start accepting WeChat Pay (see below). As the UK prepares for its post-Europe future, and destinations in constant flux, travel companies will need all the help they can get to survive; taking stock of their payment technology could give them a winning hand.
When an app has been downloaded more than 800 million times, it’s hard to ignore. Step forward China’s messaging app WeChat. And WeChat Pay is the digital wallet service incorporated into WeChat, and while each WeChat user has a WeChatPay account and access to the wallet, where they can make payments and send money between contacts, there are 300 million active WeChat Pay users. Travel organisations are being urged to accommodate these types of payments. One chain, Thailand-based Dusit Hotels & Resorts, recently signed a partnership agreement with Ksher (WeChat Pay Thailand) and Asset Bright Public Company Limited to accept WeChat Pay at its properties. Dusit claims it is the first hotel group in Thailand to accept WeChat Pay at its hotels in Thailand, and plans to rolls out the acceptance globally.