travel industry recovers from the COVID-19 crisis, signs are emerging that the
business of payments – both for businesses and consumers – is changing rapidly.
"COVID-19 has accelerated the rate of innovation within the payments space to quickly form the 'next normal,' requiring payment firms to be digital masters almost overnight," says Anirban Bose, CEO of Capgemini's Financial Services and group executive board member.
For B2B payments, a new study from Amadeus finds trends that were emerging pre-pandemic - especially related to the adoption of alternative payment methods - are quickening across all sectors as travel companies prioritize profitability as they recover.
conducted by Coleman Parks on behalf of Amadeus during the first quarter of
this year finds that “improving profit margins” is the biggest pressure cited
by travel agents (74%), international airlines (70%) and hotel chains (60%) – compared
with just half that indicated that as the primary factor pre-COVID.
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of profit is clearly related to the challenges suppliers faced related to the
unprecedented volume of refunds they had to process during the last year, which
impacted their bottom lines in multiple ways.
to the report, 93% of respondents had to increase staffing to deal with higher
early 2000s, virtual
cards have been gaining traction as a payment option that simplifies and
speeds up reconciliation and minimizes risk.
a clear correlation between payment method, manual resources required and
ultimately, costs. In
fact, virtual cards have been shown to significantly reduce reconciliation
processes. One reason
for this is that, unlike bank transfers which require manual reconciliation,
virtual cards can
link the passenger number (PNR) to a one-time pass code allowing refunds to be tracked
automatically across the ecosystem,” says the Amadeus report.
acknowledge many benefits to virtual card payments, only 60% say they are using
them. But Amadeus’ head of payer services, Damian Alonso, expects that number to
pressures of the pandemic continue, the travel industry is accelerating the
switch to digital B2B payments. This means that agents don’t need to lock up
funds as a guarantee in traditional industry settlement schemes, and providers
get paid in near real-time, securing vital cashflow,” Alonso says.
true that some merchants historically questioned the acceptance of virtual
cards due to a perception of higher costs but those days are coming to an end
as the pandemic has highlighted the tangible efficiency gains of being paid
In fact the research found
a clear correlation between virtual cards and reconciliation due to COVID. Only
20% of agencies that pay suppliers with virtual cards said they had to hire
extra staff to deal with refunds and chargebacks, but 80% of those not using
virtual cards did have to add staff for this purpose.
pandemic has also accelerated alternative payment options for consumers.
Capgemini’s survey for its World Payments Report 2020 found 41% of respondents
who said they often use cash have tried a contactless card during the pandemic. Additionally,
of survey participants who often use a card, 35% have tried a digital wallet and
27% have tried QR code-based payments.
As the pressures of the pandemic continue, the travel industry is accelerating the switch to digital B2B payments.
Damian Alonso - Amadeus
trends reflect the rise of interest in all things “contactless” during the past
research from Guestline finds 20% of its hoteliers in the United Kingdom and
Ireland say contactless payment solutions are the technology that received the
greatest share of their investment budget in 2020 and more than a third (38%)
say they plan to make investments in contactless payment technology this year.
On Monday, Guestline released an upgrade to its online check-in solution GuestStay to include
payments and checkout.
“The last 12 months have necessitated the
need for smarter and safer guest experiences. One of the lasting legacies of
the pandemic will no doubt be the development of new technologies and platforms
to achieve this, which are set to pave the way for recovery as hoteliers
finally prepare to re-open and welcome guests back,” says Andrew Metcalfe, chief
technical officer at Guestline.
the contactless experience, whether that be check-in, checkout or payments, has
been one of the defining developments of the past year. It is encouraging to
see that both hoteliers and their guests recognize the benefits that this
technology offers and have been keen to adopt it.”
Along with new payment methods, the pandemic is accelerating payment plans options - which give consumers greater flexibility when booking big-ticket items such as airfare.
Earlier this month Fly
Now Pay Later raised $14 million in Series A funding to grow its operations
in the United Kingdom and Germany and to launch in the United States.
Uplift is also seeing traction, announcing a
$68 million credit line in January and a partnership with Southwest
Airlines in April.
And in reporting its fiscal 2021 third quarter financial results earlier
this month, flexible payment provider Affirm says it is seeing growth in gross
merchandise volume accelerate in certain categories including “travel and
ticketing.” Affirm says GMV for that category grew by more than 50% year-over-year
and nearly tripled compared to the second quarter of fiscal 2021.