News | DistributionElectronic payment trends for travel companies worldwide: A studyThis article was originally published onBy Sean O'Neil | October 2, 2013 Electronic payments are becoming more popular among travel companies, yet not much has been reported about the nuances of the trend.E-payments help increase cash flow, improve security, and lower costs. But they come with their own pitfalls, such as high fees, risk of fraud, and conflict with local preferences for cash payment in emerging markets.Diving into the details of what's working and not working in payments, PhoCusWright, the US-based market research consultancy, has written a whitepaper: "Payment Unsettled: Cost, Opportunity and Disruption in Travel’s Complex Payment Landscape."Tnooz obtained an advance copy of the paper. Some key highlights:The merchant model for online travel agency (OTA) hotel distribution isn't going away. "The explosive growth of Booking.com and Expedia's new dual approach has certainly given a boost to the agency distribution model for hotels. But intermediaries globally continue to book as much hotel volume via the merchant model as always and expect their merchant volume to grow faster than agency volume."In 2012, airlines spent nearly as much on electronic payment fees as they earned in profits. Last year, airlines worldwide paid almost $7 billion for payment processing -- a substantial sum, when compared with their $7.4 billion net profit.Alternative payments are on the rise. One in five OTAs worldwide offers alternative forms of online payment. Another 38% of OTAs and 21% of airlines and 32% of lodging suppliers, respectively, plan to do so "in the near future," reports PhoCusWright.Electronic payments bring risks. Businesses that gross more than $100 million a year in bookings say that card fraud is their top concern with payments. "OTAs have the highest average rate at 1.2%, followed by airlines and lodging suppliers, which each reported fraud for 1.1% for their website bookings," says PhoCusWright.The study was based on questionnaires sent to 1,523 qualified respondents, plus interviews with 30 industry executives. Some data came from ARC (Airlines Reporting Corporation) and IATA (International Air Transport Association).