The Coming Payments Revolution in Travel

By Robert McGarvey

It’s about time: travel providers, at least the big ones, now are edging into an embrace of the payments revolution that in the past half dozen years have given us contactless payments, also mobile payments such as Apple Pay and Google Pay, and also EMV cards.

Reports Pymnts in a recently published report “Travel Payments Study:” “More than two decades after PayPal was founded, and four years since the launch of Apple Pay, the travel industry is taking its first cautious steps into its own payments revolution.”

The staggering reality is that travel has been under assault by hackers for at least a decade – it numbers among the most attacked verticals in the Verizon Data Breach Report.  Just converting to EMV at gift shops, bars and restaurants at hotels would put a serious crimp in hacker styles, but hoteliers are among the slowest to move into the new technologies.

Taking Apple Pay at check in would also be a boon to guest data security.

A peculiar irony is that credit card data insecurities may be a reason why travel providers have not innovated. Said Pymnts: “At 78 percent, consumer data security was, by far, the most-cited inhibitor to payments innovation. Following that was credit card data security imperatives, at 74 percent, which were listed as either ‘very’ or ‘extremely’ inhibiting. Incurred fraud losses came third, cited by 64 percent of respondents.”

Except now Pymnts reports that changes are coming.

It’s not your imagination that travel providers have been notorious laggards. Says Pymnts: “PYMNTS’ most recent research revealed that just 15 percent of all travel companies have attempted new payments innovations over the last three years, let alone those that succeeded in implementing them.”

Just 15%.  Wow.  This has been a span of feverish innovation, at least when viewed from the stodgy perspective of bankers.  And travel has sat it out.

Operating internationally and a broad industry dependence on third party payments processing services are cited among the reasons for delays in adoption of payments innovations.

Guests, too, have not insisted on innovations. Consider: most of us still, docilely, hand over a credit card in a restaurant, the server vanishes, and a few minutes later a receipt comes at us.  I cannot remember the last time I saw that at a restaurant in Europe, where servers – for at least 15 years in my recollection – have been equipped with miniature credit card processing gadgets that also print out a receipt, all in your plain view.

You just have to wince when you hand over a credit card at a hotel because the data just has been so insecure.  But a big driver for payments innovation – maybe the biggest – has been enhanced security.

And still travel providers stayed on the sidelines.

That’s changing. According to Pymnts, about 80% of travel providers plan payments innovations in the next three years.

14% say they plan to roll out “a lot” of innovations.

Just 5% say they have nothing in the hopper.

What’s prompting travel providers to invest in payment innovations? 91% pointed to customer suggestions as a prod – meaning our grumbles have been heard. 83% also said they had lost customers because they hadn’t innovated.

Reported Pymnts: “The demand for new payment methods isn’t being driven by companies looking to cut costs or boost efficacy, though, but by consumers in search of a more convenient and compelling payment experience.”

Travel providers also expect that although innovations have price tags, they may wind up actually saving money. Reported Pymnts: “We asked respondents whether they believed the financial gains to be had from payments innovations would outweigh the costs, and an impressive 96 percent of the sample had a positive outlook. These companies believe that the revenue gained would outweigh its costs, that innovation would have no effect on costs or that it would actually decrease costs.”

Large companies are much more optimistic about cost reductions than are small – and travel remains a business where there are many small players: travel agents, independent hotels, independent restaurants, local destination marketing companies, etc.  

Big players also see payments innovations as a way to drive down their payments processing costs – and probably they are right.

Should we in fact be optimistic that payments innovations are in fact coming – and that we’ll see more travel providers accepting Apple Pay et. al., installing EMV card readers, and – dare we hope – equipping servers in restaurants with portable reader/printers?

Just maybe we can expect to see all this. Said Pymnts: “One thing is clear, though: Travel companies must invest in improving their payments structures if they want to maintain a competitive edge.”

My advice: grumble about the absence of current payments technology when checking in, when paying in a bar, when paying in a restaurant.  Our grumbles do matter – the research underlines – so keep it up. And just maybe more travel providers will roll out contemporary payments tools.