New payment technologies can help travel companies move to real-time payments across currencies, the Travolution Summit was told.
EQ Global’s managing director Nick Pedersen said that international payments currently often involve many people’s involvement and can be expensive.
“All you want to do is send money to somebody who you owe,” said Pedersen, whose firm facilitates cross-border payments. “But are you aware of the charges?
Pedersen predicted that there will be a “pretty interesting” rise in bank to bank transfers when the ban on credit card surcharging comes in from January next year.
New technologies, he said, will mean that revoking payments across borders and currencies won’t be as much of a burden and that automation can help the payment industry move from a “batch” to a “real time” service.
Aggregators, therefore, can make sure their suppliers, be them hotels or tour companies in destinations, can receive payment instantly.
“Not paying on time can ruin relationships overnight,” said Pedersen who went on to say that the rise of new technologies can make individualised hedging possible which lead to the cost for a UK holidaymaker could vary from day to day in line with the value of the pound.
“We can map out points of foreign exchange exposure and try to solve them. In theory, we can completely remove your exposure.”
This, he added, could mean that travel agents booking a Mexican hotel, for example, could face no foreign exchange risk.
But he warned that “if you are not constantly updating your prices, you are exposing yourself to risk.”
“You need to make sure your pricing has the ability to factor in cancellations. You have to please both customers and supplies.”
Pedersen also revealed that the main reason a customer may abandon a transaction when buying travel online is when they are asked to pay in a foreign currency, with up to 13% of people opting against buying products such as tours, accommodation or flights online when faced with working out the exchange rate.
“The biggest challenge for OTAs (online travel agents) is foreign exchange and cross border payments,” he said. “Cross border markets are not simple.
“It does seem strange in this digital world that businesses take three, four or five days to receive payments but regulation is starting to help solve that.”