Travel firms must go digital to minimise payment risks

The news that two of Europe’s largest airlines – Monarch and Air Berlin – will cease trading is distressing for thousands of travellers and employees. The move into administration from Monarch alone is expected to impact 860,000 people who have lost bookings, 110,000 holiday makers currently overseas and of course its 2,100 employees.

But it’s not just holidaymakers and employees who stand to take a hit. Without a doubt, we’ll see a knock-on effect on the travel agents and operators in dealings with the airlines. Supplier default and fraud are cited as major concerns by 40% of the travel industry. So, how can digital payments help prevent and mitigate such risks?

Businesses working together is what keeps the travel sector ticking. It has to deal with suppliers in numerous countries, different currencies and vast amounts of future bookings. As a result, an issue affecting one company can quickly have a knock-on effect on many other individuals and businesses.

>See also: Digital payments volumes continue to rise globally 

Despite the inter-connected nature of the industry on the consumer facing side, B2B travel supplier payments still use traditional payment methods such as cash and cheque. Or book with suppliers and settle later. As well as fraud risks, there is no protection should a supplier default, and increased exposure to currency shifts, potentially leaving the travel company out of pocket come settlement time.

However, there is an easy solution to reducing risks – go digital. Innovations in payments aren’t just constrained to the consumer side. There are payment methods that better match the demands of today’s online landscape, while significantly reduce the risks of fraud and provide protection in the case of supplier default.

For example, Virtual Account Numbers (VANs) are one of the fastest growing alternative payment options in the travel industry. VANs are 16-digit Mastercard numbers generated uniquely for each transaction. As there is a verifiable digital record, sophisticated chargeback capabilities allow funds to be claimed in the event of supplier default. Something more traditional forms of payment would not offer.

>See also: Is cash dead? Or does it have a place in today’s payments landscape?

In 2016, the company which owned cruise lines Swan Hellenic and Voyages of Discovery, All Leisure Group, ceased trading leaving one Australian travel wholesaler facing a potential loss of US$190,000 from the liquidation. However, as the wholesaler had paid with VANs, the eNett team were able to recover all the funds within nine days through chargebacks. Not only did it protect the travel company, but also its customers too.

But it’s not only supplier default that poses a threat to the travel industry; fraud is a significant issue. According to estimations by The International Airport Transport Association (IATA), fraud is costing airlines up to $1 billion a year and the Association of British Travel Agents (ABTA) reports that travel fraud is up 425% year-on-year. The most common examples are ‘card-not-present’ fraud and scam or cloned websites.

Again, alternative payment options provide a solution by replacing the physical static card number with a virtual one. With VANs, a 16-digit Mastercard number generated uniquely for each transaction. You can also add a wide number of payment parameters for greater control, including restricting the VAN by merchant category code. A digital solution to minimising the risks of fraud.

>See also: The cashless payments opportunity for local authorities

As demand for exotic destinations from the consumer continues to rise, travel companies will need to transact with more suppliers in more currencies to match this popular trend. In addition, a complex range of economic and political factors is increasing the commercial pressures on airlines, hotels, tour operators and travel agents.

Modern digital payment options provide a means of catering for this consumer trend, whilst minimising operational cost and business risk. Protecting your travel business and customers is as simple as changing the way you pay.

 

Sourced by Anthony Hynes, managing director and CEO, eNett International

 

The Women in IT Awards is the technology world’s most prominent and influential diversity program. On 22 March 2018, the event will come to the US for the first time, taking place in one of the world’s most prominent business cities: New York. Nominations are now open for the Women in IT USA Awards 2018. Click here to nominate

Avatar photo

Nick Ismail

Nick Ismail is the editor for Information Age. He has a particular interest in smart technologies, AI and cyber security.

Related Topics

Digital Payments