New Payment Technology Could Save Travel Businesses Costs and Time
In 2013, it was estimated that two out of five travel agencies had adopted virtual payments, according to MasterCard Worldwide.
This is a great reflection of the progressive nature of the sector and its willingness to embrace new technology. However, the majority of supply chain payments continue to take place utilising more traditional mechanisms such as BACS, Swift, Credit and Prepaid cards and indeed e-wallets such as PayPal. This mix of payment channels can become an administrative burden and adds an additional level of financial complexity, with the cost of payments changing by channel and supplier.
“Whilst there is undoubtedly increasing noise around crypto currencies such as BitCoin, we don’t believe that this will become a mainstream payment vehicle in the near future. At Tuxedo, we believe that rather than looking to new payment channels, the most significant short term opportunity for the travel industry is to use technology to consolidate the existing channels and processes to drive efficiency and cost savings.
At Tuxedo, we are currently working to develop and implement a web based portal that will enable travel businesses to carry out supplier payments across existing channels from a single point. This will mean that organisations will no longer need to log into different systems to make bank payments, card payments, virtual payments etc. They will be able to log into one platform and make the payment using the most appropriate channel for them. As well as offering clients a much more streamlined process, we believe that we will also be able to offer businesses an opportunity to bring down the real cost of payments as well. Using a mix of our own prepaid and virtual payment solutions, alongside leading third party payment channels, we anticipate we may be able to bring real costs down for many organisations by as much as a quarter, as a result of the volume of payments being processed driving cost/price efficiencies.
According to responsibletravel.com, in 2013 over 143m transactions were generated by agents and The World Travel and Tourism Council anticipates that travel and tourism will reach a global value of $10.8tn by 2018 , As such, this level of saving, both in real terms and administrative costs would be significant in an industry that is seeing increasing downward pressure on margin.
The travel sector has already demonstrated a forward thinking approach through its adoption of virtual payments, and so the emerging path toward one streamlined payment portal will be a natural, progressive step for the industry.”