The online travel sector in China, and across Asia in general, is characterised by a broad spectrum of payment options, with digital wallets featuring prominently in the list of alternative form of payments (AFPs).
NB This is a feature by Ritesh Gupta, a reporter for China Travel News.
For instance, Marriott International is currently working on plans to roll-out Alipay as a payment option in China.
But even Chinese companies are strengthening their payment strategy. Ctrip is reportedly very close to allowing foreign travellers to use their Chinese debit cards to make purchases on its platform. This would mean elimination of service fees that comes with using foreign credit cards to make international purchases, and facilitates convenient travel for foreigners residing in China.
Last month Qunar chose CyberSource’s global payment gateway services to process international online and mobile payments from various card types and from multiple card brands and issuers.
Marriott, which recently tied up with Ant Financial Services Group for its new offering, also intends to introduce Alipay to properties in key markets outside Asia by the end the next year.
“We target to release acceptance of Alipay at the first 10 hotels and Guangzhou reservation centre, and via Marriott.com.cn any time now. It will then be activated on the Marriott International English website and our Chinese mobile app at a later stage,” Craig Smith, president and managing director of Marriott International, Asia Pacific told ChinaTravelNews.com.
Powerful blend of China and mobile
Smith says there are two key trends in the hospitality industry nowadays: mobile and China. He says:
“For Marriott International, we see 50% of our digital visits are done from a mobile device. In terms of sales, our mobile sales increased 35% year-on-year. Customers nowadays prefer to book their travel on their smartphones. Smartphones are the fastest growing segment in e-commerce for Marriott International....
“The second consideration is China. It is expected that the number of outbound Chinese travellers will reach 200 million people a year by 2020. Alipay is one of the most trusted and popular mobile payment options with Chinese travellers, who now lead the world in outbound tourists and purchasing power.
"As of June 2015, Alipay has 80% market share in China, and according to our consumer insights, the use of Alipay as a payment option is one of the top “needs” when Chinese travel to overseas, especially for the Next Generation (Gen Y) traveller.”
Preparation
Smith said the roll out of Alipay at the first 10 Marriott International hotels in Asia has been smooth. At select Marriott International hotels, the front desk will install dedicated QR code/ barcode scanners that are connected to the Alipay system.
“To prepare, the 10 selected proof of concept hotels have undergone weeks of testing to ensure that the technology is stable and will complement the superior service that we provide our guests.
“In addition, we have trained our reservations and operations staff to support this implementation."
The hotel company rolled out the Alipay service called Spotpay, which is not the escrow payment. Transactions conducted using this Alipay payment method will go directly to Marriott, not a third-party.
Smith said the importance of mobile payment methods such as Alipay is that they are enabling e-commerce to become mobile and convenient for customers. “By adopting Alipay at Marriott International hotels, we are making it easier for our hotel guests to pay for their hotel stays, food and beverage purchases as well as for meeting and event bookings,” he said.
How to accept Alipay
There are two ways businesses can start accepting Alipay payment method - direct integration with Alipay or though one of the third parties such as a payment gateway provider.
Both of these ways have their own pros and cons, says Singapore-based Shreyansh Durgesh, director of sales and business development, Asia Pacific, Bitnet Technologies.
“For example a direct integration may be cheaper but hard to manage due to limited support coverage by Alipay for international locations. On the other hand, working with third parties simplifies the integration process through a single connection, streamlining functions such as ongoing reporting but it comes mostly at a higher cost. Choosing either of the methods depends on business’ requirements and priorities.”
Durgesh also added that there are important operational considerations such as reporting and reconciliation, settlement process, refund management, ongoing support levels from the provider and rollout of future functionalities.
Elsewhere, Nagarajan Rao, SVP global head business & product, Transpay, admitted the resources needed to integrate a PSP payment service provider (PSP) such as Alipay can be extensive. Says Rao:
“For a large, international travel brands such as Marriott, operating in China requires a separate integration cycle and payment acceptance service level than would typically be needed for other regions and markets. This means that the travel brand would need to dedicate resources and staff to processing and acceptance for the Chinese renminbi."
He adds that there are other PSPs such as Stripe and Braintree which offer a more seamless integration on the backend, but it is easier for brands in China to work directly with Alipay because of regulations in the market and its reach.
Integrated payment solution
Global brands are also looking at other markets in Asia as they embrace new payment options. Brands need to understand how some transactions are a blend of digital and offline. They also need to know that various payment options have different rules.
Digital wallets can help address local market needs.
But for travel companies operating in Asia, the best option is an integrated solution which covers most of the local payment acquirers and payment brands in the region. Brands can integrate via one platform rather than dealing with each acquirer separately.
Hints and tips
While working on a payment strategy, key considerations are:
- Design the integrated payment flow to work across payment options across channels and languages
- Implement integrated payment transaction and settlement reporting
- Implement multi-currency processing and conversion
- Implement controls according to the different processing mechanisms
- Implement fraud monitoring and prevention across payment options
- On-going support, maintenance and upgrades
Whatever approach local and international travel brands take to payment options in Asia, the goal is the same - to curtail checkout friction and boost conversion.
NB This is an edited version of a feature written by Ritesh Gupta. It first appeared on China Travel News, a Tnooz content partner.