Summer time does not rhyme with a vacation for travel agents. It is the peak season where thousands of people are traveling and when travel agents are literally overwhelmed with a voluminous workload. It is true to say that the travel industry is highly delicate as if it easily influenced by various unpredictable factors. And even in low season, the market can be subject to various negative factors. The challenges that travel agents have to overcome are indeed not so simple.
Five major payment challenges facing travel marketers
Challenges and obstacles are part and parcel of the ever-fluctuating travel industry. Increasing competition, shifts in the global economy, geographical turmoil, natural disasters and online are among key common known factors that constantly reshape consumer demands and ultimately, the market. There are equally other factors and trends in the payment sector that can hurt a business. Travel marketers should know how to tackle each one of them tactfully and wisely to stay afloat.
Goodbye to excessive card surcharges
For decades, the travel industry has thrived on drip pricing. This technique consisting in advertising a headline price at the beginning of a purchase process, and piling additional charges later own to blast the final cost, has always been a powerful weapon for travel companies. Among the common additional fees being added is card surcharges.
The landscape is about to change. As at January 2018, a new law is going to prohibit agents from charging fees when a customer is using his credit or debit card. If this is good news for the latter, the scenario is definitely going to be really bleak for travel agents.
Low-cost bookings, like car rentals, short stays or flights, were usually sold where additional charges came up greater than the initial product or service itself. In 2013, new limits were established on agents regarding card surcharge, following observations of the Office of Fair Trading that the travel industry was charging around $380M only in card surcharges in peak seasons. As from 2018, this amount is going to be literally slashed to zero.
Travel agents will be faced with a headache on how to counteract the impacts of this law on their businesses. Some may be tempted to introduce new fees such as booking fees to try to compensate for the gaping holes that this measure is going to entail financially.
CNP fraud is hovering above small travel agents
The airline industry loses more than $1.3 billion yearly in terms of card-not-present (CNP) fraudulent online ticket purchases, according to findings by Europol. A major international sting operation in 2016 led to the arrest of 200 individuals. 43 countries, 75 airlines and 8 online travel agencies were concerned.
Small operators having fewer contingency funds may be seen as easy targets for fraudsters. Fraud represents a major challenge and to protect themselves from online fraud, small travel agents have to choice than to seek the help of payments-processing partners who can ensure state-of-art fraud mitigation in the travel industry presenting a unique bundle of risks.
Aligning payments for global travel culture
There are practically no boundaries in traveling around the planet today. People are more and more willing to explore new territories and trips are easier to find and to afford as well. This is a double-edged sword for travel agents: if the latter can consider this as an opportunity for business expansion, it can equally be a real challenge as they equally need to ensure flexibility of payments for these new destinations. E-wallets are gaining traction in countries in the Pacific and in Asia. As such, travel agents are expected to align their system of payments according to the region’s most common form. Furthermore, to navigate through various legal and regulatory landscapes, it is crucial for them to choose the right payments processor without having to worry about compliance and security issues.
B2B international payments have to be ensured
It is impossible to operate in the travel industry without ensuring secure B2B cross-border payments. The ability to exchange money with global suppliers and partners is critical to the survival of any travel business. Same has to be done with minimal risks, costs and regulatory hurdles. Teaming up with a renowned payment service provider will help to avoid negative impacts triggered by fluctuating FX rates, geopolitical tensions, long settlement times, heavy transaction fees and fraud risks.
Consumer protection means late payments for agents
As pet The Package Travel, Package Holidays and Package Tours Regulations 1992, when consumers purchase a vacation package, his fund is held in a trust account until the travel agent delivers it on its end of the contract, that is, the full trip. This process aims at protecting consumers in case travel agents go out of business or if other issues arise. If this is a good safety net for clients, it does represent a headache for agents who subsequently have to wait for a period of time to get paid.
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