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Travel trade slugged $100b in payment fees

A new study has revealed that travel companies spend on average over five percent of their revenue on managing payments.


With 5.3% of their entire income going to charges and other indirect costs, the Amadeus-commissioned study found that the travel industry paid a massive US$74.5 billion (around AU$100 billion) just to handle transactions.


And among smaller travel businesses, that is those earning under $20 million, the fees are even higher at around 7.5% of revenue.



To deliver a more personalized customer experience, as well as hopefully save itself some serious bucks, many companies within the travel sphere are looking to advance their payment processes by embracing a boom in ‘fintech’ innovations such as contactless and instant payments to cryptographically secure digital currencies.


Over 95% of the companies interviewed in the Amadeus study said they planned to introduce new payments innovations in the near future, while around 15% are planning a “lot of new innovations”.


Complexity of payments however, isn’t making it any easier for businesses, with 85% of companies confirming a rise in the number of accepted payment methods over the past five years.


Interviewing nearly 80 payments managers from hotels, airlines and travel intermediaries, the study found the average number of methods accepted now sits at nine, with companies having added an average of three new methods over the past several years.


Over 80% of travel companies also work with between 3-10 different payment services suppliers.   


“The travel industry is standing at a tipping point in payments innovation. The next few years are a real chance for the industry to improve the customer experience and to manage costs through innovation with a host of advances in FinTech,” Amadeus Payments Managing Director Bart Tompkins said.


“Our advice to those companies looking to innovate in payments is to take a strategic approach: define what is a core competitive advantage and what should be outsourced.


“Then, when evaluating future innovations, focus only on those which improve customer experience, address complexity, or reduce direct or indirect costs.


“The travel industry is more international than any other, requiring payment methods that cater to a global customer base and a host of government regulations that must be managed.”


Taking action against two travel companies (Europcar and Cruisin Motorhomes) in the past fortnight, the ACCC has targeted Australia’s travel sector to stop excessive credit card surcharging.


The Australian Federation of Travel Agents (AFTA) reminds members that from 1 September 2017 all businesses, can only charge their client what it costs them to process a payment. 


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Written by: Mark Harada
Published: 30 July 2018

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