Why regulation will ignite innovation in travel payments

We presented at World Travel Market, a four day extravaganza at London’s Excel Centre attracting anyone who’s anyone in the industry. In the Travel Technology Theatre, our Chairman John Chaplin gave an important speech in which he outlined a vision for the future of payments and how this will affect the travel sector.

Payments and their challenges create a lot of discussion points within travel. To take just a couple of examples, consumer pressure groups such as Which? have made a big noise over the last couple of years about ‘unfair’ surcharges levied by low-cost airlines for booking flights while a lot of travel businesses feel squeezed by the card schemes over interchange fees and payment processing costs.

In July the EU adopted a payments legislative package which should alleviate some of these payments pain points. The package is wide-ranging and not solely aimed at the travel sector but some of the proposals will have a significant impact on travel businesses. These include a provision to cap interchange rates at lower levels than they are currently and an end to ‘excessive’ surcharges on debit and credit card payments.

While some unexpected consequences are inevitable, we can predict with reasonable certainty some positive outcomes for the travel industry. Transaction charges to travel businesses for processing payments are likely to drop. Crucially charges for payments are also likely to be made much more explicit than they currently are (at present travel merchants have to bear fees for payments which are far from clear). Under the new regulatory environment any payments products and services will therefore have to deliver real benefits to travel businesses if they are to justify their fees.

Who is best placed to drive payments innovation for the travel sector? Well, it’s unlikely to be the banks, which tend to be hampered by legacy infrastructures and business models.  Technology vendors and new market entrants can bring a fresh perspective to travel payments and are in a much stronger position to create innovative solutions. When it comes to the best payment type with which to innovate, prepaid cards are undoubtedly the best product platform on which to drive value. While we’re seeing little investment into debit and credit card products, money is pouring into prepaid, both physical and virtual.

Ixaris and its technology partners use prepaid cards to deliver real value to travel businesses not only through interchange but also through simplified payment and reconciliation processes and reducing fraud and PCI exposure.At World Travel Market two travel technology providers demonstrated how they are using Ixaris virtual prepaid card technology to drive value for their customers and generate additional revenue.

Travel technology partner Multicom unveiled its new payments facility MultiCommerce. Using virtual prepaid cards supplied by Ixaris, MultiCommerce is directly integrated with their booking platform FindandBook and allows travel agents to securely process consumer payments. Multicom’s clients can also save on card surcharges implemented by airlines, reduce foreign exchange fees and more easily meet PCI DSS obligations amongst many other benefits. MultiCommerce represents Multicom’s continuing aim to provide their clients with software solutions that increase revenue, provide greater process efficiency and make their business easier to manage. Voxel Group, the world leader in electronic billing for the travel industry, announced that it had embedded payments functionality based on Ixaris’ virtual prepaid cards to its e-invoicing platform baVel. Previously Voxel Group’s clients when settling an invoice would have to send a payment separately back to the supplier via bank transfer, interrupting workflow and incurring hassle and extra costs. Now buyers can send payments orders directly through the baVel network. This improves customer experience for Voxel Group’s clients while driving additional revenue for Voxel.

Payments regulation does not have to be a straitjacket. It is a business opportunity for forward-thinking travel firms. If you are a technology firm that would like to take advantage of virtual prepaid cards, contact Ixaris today.