how travel payments are transforming the industry
DESCRIPTION
Panel: Jason Hancock - head of channel development, eNett International Luis Yofe - senior business leader, Travel Payments Solutions, MasterCard Worldwide Kevin May - editor and moderator, Tnooz Gene Quinn - CEO and producer, TnoozTRANSCRIPT
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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AGENDA
INTRODUCTION TO THE RESEARCH STUDY
KEY TRENDS
A CASE FOR VIRTUAL CARDS
THE TRUE COSTS OF PAYMENTS
CONCLUSION
Copyright © 2013 eNett International (Singapore) Pte Ltd. Confidential and Proprietary6
RESEARCH INTRODUCTION
Jason Hancock
Head of Channel Development, eNett International
Copyright © 2013 eNett International (Singapore) Pte Ltd. Confidential and Proprietary7
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
Copyright © 2013 eNett International (Singapore) Pte Ltd. Confidential and Proprietary8
COVERING A BROAD RANGE OF RESPONDENT SIZEDISTRIBUTION BY GROSS TRAVEL BOOKINGS IN 2012
Source: PhocusWright’s Payment Unsettled – Cost, Opportunity and Disruption in Travel’s Complex Payment Landscape
Copyright © 2013 eNett International (Singapore) Pte Ltd. Confidential and Proprietary9
AND FROM A VARIETY OF INDUSTRY FUNCTIONSDISTRIBUTION OF RESPONDENTS BY FUNCTIONAL AREA
Source: PhocusWright’s Payment Unsettled – Cost, Opportunity and Disruption in Travel’s Complex Payment Landscape
Copyright © 2013 eNett International (Singapore) Pte Ltd. Confidential and Proprietary
KEY TRENDS
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TAKING STOCK OF THE CURRENT TRAVEL PAYMENTS LANDSCAPESUPPORTED PAYMENT METHODS – ALL RESPONDENTS
Source: PhocusWright’s Payment Unsettled – Cost, Opportunity and Disruption in Travel’s Complex Payment Landscape
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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?
Copyright © 2013 eNett International (Singapore) Pte Ltd. Confidential and Proprietary
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
Source: PhocusWright’s Payment Unsettled – Cost, Opportunity and Disruption in Travel’s Complex Payment Landscape
Copyright © 2013 eNett International (Singapore) Pte Ltd. Confidential and Proprietary15
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
Source: PhocusWright’s Payment Unsettled – Cost, Opportunity and Disruption in Travel’s Complex Payment Landscape
Copyright © 2013 eNett International (Singapore) Pte Ltd. Confidential and Proprietary16
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
Source: PhocusWright’s Payment Unsettled – Cost, Opportunity and Disruption in Travel’s Complex Payment Landscape
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TREND 3: INCREASE IN DIRECT SUPPLIER RELATIONSHIPS
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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
Source: PhocusWright’s Payment Unsettled – Cost, Opportunity and Disruption in Travel’s Complex Payment Landscape
Copyright © 2013 eNett International (Singapore) Pte Ltd. Confidential and Proprietary19
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
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TREND 5: OPERATING IN GLOBALISED MARKETSMANAGING CROSS-BORDER AND FOREIGN CURRENCY ISSUANCE & ACCEPTANCE
Source: PhocusWright’s Payment Unsettled
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THE TRUE COSTS OF PAYMENTS
Luis Yofe
Senior Business Leader, Travel Payment Solutions,
MasterCard Worldwide
Copyright © 2013 eNett International (Singapore) Pte Ltd. Confidential and Proprietary22
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?
Copyright © 2013 eNett International (Singapore) Pte Ltd. Confidential and Proprietary23
COST 1: THE OBVIOUS SURCHARGE COSTCHARGING SURCHARGES FOR MAKING BOOKINGS OR USING A PAYMENT METHOD
Source: PhocusWright’s Payment Unsettled – Cost, Opportunity and Disruption in Travel’s Complex Payment Landscape
Copyright © 2013 eNett International (Singapore) Pte Ltd. Confidential and Proprietary
(1) Gross Annual Travel Bookings(2) Based on and average travel consultant salary of US$15 per hour
Source: PhocusWright’s Payment Unsettled – Cost, Opportunity and Disruption in Travel’s Complex Payment Landscape
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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
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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)
Source: PhocusWright’s Payment Unsettled – Cost, Opportunity and Disruption in Travel’s Complex Payment Landscape
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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
Source: PhocusWright’s Payment Unsettled – Cost, Opportunity and Disruption in Travel’s Complex Payment Landscape
Copyright © 2013 eNett International (Singapore) Pte Ltd. Confidential and Proprietary27
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
Source: PhocusWright’s Payment Unsettled – Cost, Opportunity and Disruption in Travel’s Complex Payment Landscape
Copyright © 2013 eNett International (Singapore) Pte Ltd. Confidential and Proprietary
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
Copyright © 2013 eNett International (Singapore) Pte Ltd. Confidential and Proprietary
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Transforming travel payments…
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Q & A
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Thank You!
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