NEW research from eNett and PhoCusWright has unearthed an apparent gulf between perception and reality in terms of the true cost of payments in the travel industry. Many see credit card costs as a major concern, but don’t realise that credit cards work out 37 per cent cheaper than alternative payment methods. At the same time, a large proportion of the industry is spending huge amounts of time on manual payment processing and reconciliation, despite the drain this has on resources.
The misconception around credit cards stems from the fact that organisations look only at merchant fees and airline charges, without considering the cost of manual processing, reconciliation, fraud, processing chargebacks, and reporting on invoices and commissions across multiple payment platforms.
These tasks are proving very costly. The research finds that 40 per cent of the industry still operate in this way and for an agency, these processes can cost anywhere between $300 and $6,000 per week. And it’s the same for suppliers. Even using a conservative estimate for average turnover of between $1-5 million per annum, for an industry which is estimated to be made up of over 250,000 agency establishments worldwide, this equates to a total loss of more than $1.5 billion per year.
Anthony Hynes, managing director and CEO of eNett, said: “Our research sheds light on just how much time and resource the industry is outlaying through use of out-dated and inefficient payment and reconciliation processes as well as the costs of supplier default and fraud.
“The use of newer payment methods, such as virtual account numbers (VANs), could alleviate this situation and help cut costs. Through integration with the GDS (global distribution system) and by creating an individual number for each transaction, VANs eliminate manual payment handling requirements, streamline reconciliation, reduce the need for expensive fraud prevention solutions and ensure that transactions are both efficient and transparent.”