Travel firms are under increasing pressure to make payments more streamlined as firms like Uber provide digital experiences that are recalibrating consumer expectations.
This is just one of many factors behind the widespread adoption of Virtual Account Number payments processes in recent years, replacing traditional multi-use credit card payments.
But Anthony Hynes, managing director and chief executive of eNett International, in which Travelport has a majority stake, believes the penetration of VANs in travel is only set to accelerate.
“It will be interesting to see what happens in the next three to five years. We think we will see virtual cards really take off. We think it’s still early days.
“Research we have done suggests virtual payments will surpass other forms in the next five years, but the work to drive awareness to build adoption is a long way from finished,” Hynes said
As well as consumer expectations, set by the likes of taxi hailing app Uber, of being able to pay instantly and securely using whatever platform, device or currency they choose, a host of other factors and trends are helping to build the case for VANs.
Hynes believes the convention of agents being provided with credit facilities by suppliers, industry organisations and financial institutions is showing signs of strain.
Aviation body Iata is tightening payment terms and credit security requirements for its Billing Settlement Programme.
And Hynes says he cannot see how hotel bill back and money being held in trust accounts or secured through bonding arrangements survive in the digital age.
“Agents are going to need to get smarter in how they collect money from their customers and pay their suppliers,” said Hynes.
“There can be eight to nine steps in paying a hotel. How can we provide a better experienced to our customers that enables them to give a better experience to theirs.”
ENett’s performance has been highlighted as one of the leading lights in Travelport’s trading updates in recent quarters as the GDS looks to boost its non-air revenues.
And other forces are also working in favour of payments technology firms like eNett, according to Hynes.
New EU legislation on data protection due to come in on May 25 next year will make it imperative that firms ensure they are protected from fraud and the growing threat from cyber criminals means one off payment VAN cards are innately more secure.
Under new General Data Protection Regulation rule, companies that are lose customer data and are found at fault face fines of €20 million or 4% of global turnover, whichever is higher.
Add to that the recent volatility in foreign exchanges markets due to geopolitical upheaval caused by Brexit, the election of president Donald Trump in the US and unrest in the Middle East and travel firms’ attentions has been drawn to the efficiency of their processes.
“Travel agents have got to have a vision of how they are going to use digital themselves and design back office processes so they can do that at scale and then build the front end. Too often people do the front end first.”
Hynes said the advantage of virtual card payments is that supplier can receive their money instantly while the customer money is not out at risk of the supplier fails.
He said firms can also use virtual payments to mitigate the impact of foreign exchange fluctuations, such as seen after the Brexit vote.
Large multinational firms like Skyscanner benefit particularly from this as it collects payments from customers and pays suppliers in multiple currencies constantly.
ENett can now facilitate the handling of payments in 32 currencies and settles in 17. It expects to see significant growth in markets like Asia where credit card penetration remains relatively low.
“The big successful OTAs are doing this, some TMCs are doing it, but there are still a hell of a lot of people in the space who are not,” Hynes said.
“We have seen significant success in the OTA space over the years, particularly with the really smart ones.
“On average they are growing at 20% but the smart ones like are growing at 40% to 50% because they have been able to build scalable processes in the back end which includes payments.”
Australia-based eNett has been establishing more of a physical presence in international markets having come to the conclusion that regional hubs are better at facilitating growth.
This is starting to pay off in markets like Japan, Hong King, Singapore and China, Italy and German speaking markets, said Hynes. “We tend to see customers go on a three year journey.
“They tend to go quite slowly introducing change, maybe go currency by currency or market segment by market segment, some may start with air, others with hotels.
“In year two we tend to see a tripling of volume and in year three it doubles again. A number of different pieces come together to form the puzzle.
“We have had some great customer acquisitions which will deliver for us in 2018/19. Guidance for this year is a little lower in terms of growth rates.”
Hynes added eNett is now primed to cope with the sort of increase in business be expects to see as travel modernises its approach to payments.
“We knew first and foremost that we had to have the currency capabilities,” he said. “We had to build stability and scalability in our platform to ensure we are up 100% of the time.
“It was making sure we could prepare ourselves for volume. What we did not do was throw people into 30 countries at once.
“Having people in markets is really proving to be a good model. Having tried that and tested it we have figured out what works and what does not.”
Hynes added: “A lot of investment in product and technology is enabling our travel agency customers to broaden their horizons in terms of receivables.
“So stripping out the number of steps required to get that customer payment through to the supplier in a timely fashion is vital.
“You have to take friction and cost out of the process. If a transaction today takes 15 minutes and you can get that down to two by default you can take more transactions.”