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How travel payments are transforming the industry

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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, Tnooz

Published in: Business, Economy & Finance
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How travel payments are transforming the industry

  1. 1. Transforming travelpaymentsWebinar7 & 9 May, 2013
  2. 2. KKevin MayEditor & ModeratorGene QuinnCEO & ProducerYour hosts
  3. 3. KJason HancockHead of ChannelDevelopmenteNett InternationalYour panelistsLuis YofeSr. Business LeaderTravel PaymentsMasterCard
  4. 4. Copyright © 2013 eNett International (Singapore) Pte Ltd. Confidential and ProprietaryTITLEsubtitleStandard PresentationName of Presenter4
  5. 5. Copyright © 2013 eNett International (Singapore) Pte Ltd. Confidential and Proprietary5AGENDAINTRODUCTION TO THE RESEARCH STUDYKEY TRENDSA CASE FOR VIRTUAL CARDSTHE TRUE COSTS OF PAYMENTSCONCLUSION
  6. 6. Copyright © 2013 eNett International (Singapore) Pte Ltd. Confidential and ProprietaryRESEARCH INTRODUCTION6Jason HancockHead of Channel Development,eNett International
  7. 7. Copyright © 2013 eNett International (Singapore) Pte Ltd. Confidential and Proprietary7SURVEY SAMPLE REPRESENTATIVE OF THEGLOBAL TRAVEL INDUSTRYIndustry Segment Geographic RegionTOTAL SAMPLE = 1,523 QUALIFIED SURVEY RESPONDENTSSource: PhocusWright’s Payment Unsettled – Cost, Opportunity and Disruption in Travel’s Complex Payment Landscape
  8. 8. Copyright © 2013 eNett International (Singapore) Pte Ltd. Confidential and Proprietary8COVERING A BROAD RANGE OF RESPONDENT SIZEDISTRIBUTION BY GROSS TRAVEL BOOKINGS IN 2012Source: PhocusWright’s Payment Unsettled – Cost, Opportunity and Disruption in Travel’s Complex Payment Landscape
  9. 9. Copyright © 2013 eNett International (Singapore) Pte Ltd. Confidential and Proprietary9AND FROM A VARIETY OF INDUSTRY FUNCTIONSDISTRIBUTION OF RESPONDENTS BY FUNCTIONAL AREASource: PhocusWright’s Payment Unsettled – Cost, Opportunity and Disruption in Travel’s Complex Payment Landscape
  10. 10. Copyright © 2013 eNett International (Singapore) Pte Ltd. Confidential and ProprietaryKEY TRENDS10
  11. 11. Copyright © 2013 eNett International (Singapore) Pte Ltd. Confidential and Proprietary11TAKING STOCK OF THE CURRENT TRAVELPAYMENTS LANDSCAPESUPPORTED PAYMENT METHODS – ALL RESPONDENTSSource: PhocusWright’s Payment Unsettled – Cost, Opportunity and Disruption in Travel’s Complex Payment Landscape
  12. 12. Copyright © 2013 eNett International (Singapore) Pte Ltd. Confidential and Proprietary12KEY 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 mobileHow well do conventional payment methods support these trends, and what role doemerging / alternative payments have to play in the future?
  13. 13. Copyright © 2013 eNett International (Singapore) Pte Ltd. Confidential and ProprietaryA CASE FOR VIRTUAL CARDS13
  14. 14. Copyright © 2013 eNett International (Singapore) Pte Ltd. Confidential and Proprietary14TREND 1:CREDIT CARDS CONTINUE TO REIGN SUPREMEAirline Website Payment Methods Agency Payment MethodsU.S. AIRLINE PASSENGER REVENUE – PAYMENT METHOD BY CHANNELSource: PhocusWright’s Payment Unsettled – Cost, Opportunity and Disruption in Travel’s Complex Payment Landscape
  15. 15. Copyright © 2013 eNett International (Singapore) Pte Ltd. Confidential and Proprietary15TREND 1:CREDIT CARDS CONTINUE TO REIGN SUPREMEHotel Website PaymentMethods(1)Hotel Direct Offline Channel PaymentMethods(2)GLOBAL HOTEL GROSS TRAVEL BOOKINGS – PAYMENT METHOD BY CHANNEL(1) May include both pre-paid bookings and reservation guarantees (post-pay)(2) Multi-selectSource: PhocusWright’s Payment Unsettled – Cost, Opportunity and Disruption in Travel’s Complex Payment Landscape
  16. 16. Copyright © 2013 eNett International (Singapore) Pte Ltd. Confidential and Proprietary16TREND 2:PAYMENT AT TIME OF BOOKINGShare of Hotels offering pre-paid options on their websiteExpectations of future growthof pre-paid versus post-payMAJORITY OF HOTELIERS EXPECT PRE-PAYMENT METHOD TO INCREASESource: PhocusWright’s Payment Unsettled – Cost, Opportunity and Disruption in Travel’s Complex Payment Landscape
  17. 17. Copyright © 2013 eNett International (Singapore) Pte Ltd. Confidential and Proprietary17TREND 3:INCREASE IN DIRECT SUPPLIER RELATIONSHIPS
  18. 18. Copyright © 2013 eNett International (Singapore) Pte Ltd. Confidential and Proprietary18TREND 4:DESIRE FOR INCREASED PAYMENT AUTOMATIONVIRTUAL CARD CRITERIA MOST IMPORTANT TO TRAVEL COMPANIES40% of agencies believe virtual cards can increaseefficiency through GDS integrationSource: PhocusWright’s Payment Unsettled – Cost, Opportunity and Disruption in Travel’s Complex Payment Landscape
  19. 19. Copyright © 2013 eNett International (Singapore) Pte Ltd. Confidential and Proprietary19TREND 4:DESIRE FOR INCREASED PAYMENT AUTOMATIONINTEGRATION OF ENETT VANS INTO THE GALILEO GDS (FOCALPOINT & SMARTPOINT)2. Request a VAN by clicking the eNetticon or entering the #VAN command in theterminal window3. VAN Request screen pops-up withbooking details pre-populated. Simplycheck the details and enter yourpassword to generate your VAN4. All booking andpayment details arewritten back into the GDS#VAN1. Make your booking in the GDS
  20. 20. Copyright © 2013 eNett International (Singapore) Pte Ltd. Confidential and Proprietary20TREND 5:OPERATING IN GLOBALISED MARKETSMANAGING CROSS-BORDER AND FOREIGN CURRENCY ISSUANCE & ACCEPTANCESource: PhocusWright’s Payment Unsettled
  21. 21. Copyright © 2013 eNett International (Singapore) Pte Ltd. Confidential and ProprietaryTHE TRUE COSTS OF PAYMENTS21Luis YofeSenior Business Leader,Travel Payment Solutions,MasterCard Worldwide
  22. 22. Copyright © 2013 eNett International (Singapore) Pte Ltd. Confidential and Proprietary22TAKING 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 delaysHow well do conventional and emerging / alternative payment methods comparewhen all these different types of costs are considered?
  23. 23. Copyright © 2013 eNett International (Singapore) Pte Ltd. Confidential and Proprietary23COST 1:THE OBVIOUS SURCHARGE COSTCHARGING SURCHARGES FOR MAKING BOOKINGS OR USING A PAYMENT METHODSource: PhocusWright’s Payment Unsettled – Cost, Opportunity and Disruption in Travel’s Complex Payment Landscape
  24. 24. 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 hourSource: PhocusWright’s Payment Unsettled – Cost, Opportunity and Disruption in Travel’s Complex Payment Landscape24COST 2:MANUAL PAYMENTS HANDLING & RECONCILIATION40% of agencies typically settle through direct billingand manual payment processesSize of Travel Organisation(1) $1M-$25M $25M-$100M More than $1BStaffing 2 10 16Weekly Hours per Staff 21 24 27Estimated Weekly Cost (USD)(2) $630 $3,600 $6,480
  25. 25. Copyright © 2013 eNett International (Singapore) Pte Ltd. Confidential and Proprietary25COST 3:ENSURING RISKS DON’T BECOME COSTS39%Of agencies ratecredit card fraud amajor payment issue53%Choose virtual cardtechnology to reducerisk of fraud andsupplier default>50%Are not aware if theirpayment or travelsystems comply withthe Payment CardIndustry DataSecurity Standard(PCI DSS)Source: PhocusWright’s Payment Unsettled – Cost, Opportunity and Disruption in Travel’s Complex Payment Landscape
  26. 26. Copyright © 2013 eNett International (Singapore) Pte Ltd. Confidential and Proprietary26COST 4:BREAKAGE & UNPAID COMMISSIONS43% of airlines, 50% ofhotels and 53% ofwholesalers haveexperienced unpaid agencybookings10% hotel commissionslost for 20% of agenciesSource: PhocusWright’s Payment Unsettled – Cost, Opportunity and Disruption in Travel’s Complex Payment Landscape
  27. 27. Copyright © 2013 eNett International (Singapore) Pte Ltd. Confidential and Proprietary27COST 5:CUTTING THE COST OF PAYMENT DELAYS#2 concernLength of timebetween payment andinvoicing3 out of 4Say payment via cardsand EFT are settledwithin 2 days4 weeksTypical settlement timefor resellers payingsuppliersSource: PhocusWright’s Payment Unsettled – Cost, Opportunity and Disruption in Travel’s Complex Payment Landscape
  28. 28. Copyright © 2013 eNett International (Singapore) Pte Ltd. Confidential and ProprietarySUMMARY28
  29. 29. Copyright © 2013 eNett International (Singapore) Pte Ltd. Confidential and Proprietary29IN SUMMARY… The Travel payments landscape remains complex and fragmented, howevertraditional 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 willlikely 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 ofpayments - conventional or emerging - as these go well beyond the obvious
  30. 30. Copyright © 2013 eNett International (Singapore) Pte Ltd. Confidential and ProprietaryTITLEsubtitleStandard PresentationName of Presenter30Transforming travelpayments…
  31. 31. KQ & A
  32. 32. KThank You!Replay and presentation from today’s webinar will beavailable at www.tnooz.comPlease send your questions to kevin@tnooz.com

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