Trends in Travel Payments

Transcription

1 April 16, 2013 A PhoCusWright Special Project Trends in Travel Payments Elavon 2013 Airline & Lodging Symposium Douglas Quinby Principal Analyst PhoCusWright Inc.

2 Map the Travel Payments Landscape Region Method Model Travel Segment Source: PhoCusWright s Payment Unsettled: Cost, Opportunity and Disruption in Travel s Complex Payment Landscape

3 More Than 1500 Travel Industry Professionals Surveyed Corporate travel managers 7% Wholesalers/tour operators 12% Online travel agencies 7% Technology / payment solution providers 12% Airlines 11% Lodging 7% Other suppliers 3% Travel agencies 28% TMCs* 13% * Global operational in 3 or more regions and includes some overlap, so the pie exceeds 100%. Base: Total 1,523 respondents Source: PhoCusWright s Payment Unsettled: Cost, Opportunity and Disruption in Travel s Complex Payment Landscape 2013 PhoCusWright Inc. All Rights Reserved. 3

4 Project Partners: Sponsors: CyberSource Elavon enett International Pty Ltd. GlobalCollect Services BV Ixaris Systems Ltd. Mastercard Worldwide PayPal Inc. UATP U.S. Bank Corporate Payment Systems 2013 PhoCusWright Inc. All Rights Reserved. PhoCusWright Special Project Deliverable (Payments Project): 4 Final Draft March 25, Not for distribution.

5 The State of Pay

6 Conventional Methods Most Widely Accepted All Respondents Cash Credit cards Check Electronic funds transfer Debit cards Already supported 0% 20% 40% 60% 80% 100% Not yet but planning to Base: Total 1,244 respondents Source: PhoCusWright s Payment Unsettled: Cost, Opportunity and Disruption in Travel s Complex Payment Landscape 2013 PhoCusWright Inc. All Rights Reserved. 6

7 Source: PhoCusWright s Payment Unsettled: Cost, Opportunity and Disruption in Travel s Complex Payment Landscape

8 Alternative Methods Most Widely Accepted All Respondents Virtual cards Cash cards/cash on delivery (COD) Pay by installment plans Closed prepaid cards Alternative online methods Dedicated terminal payments Already supported 0% 20% 40% 60% 80% 100% Not yet but planning to Base: Total 1,244 respondents Source: PhoCusWright s Payment Unsettled: Cost, Opportunity and Disruption in Travel s Complex Payment Landscape 2013 PhoCusWright Inc. All Rights Reserved. 8

9 A Mobile Payment Revolution?

10 Do you support mobile only payment methods?

11 Supported Mobile Payment Methods All Respondents Mobile payment EFT services 3% 12% Mobile card swipe services 2% 14% NFC based mobile payment solutions 1% 12% 0% 20% 40% 60% 80% 100% Already supported Not yet but planning to Total 1,244 respondents, 323 travel suppliers, 178 travel wholesalers, 733 travel retailers and 190 technology providers Source: PhoCusWright s Payment Unsettled: Cost, Opportunity and Disruption in Travel s Complex Payment Landscape 2013 PhoCusWright Inc. All Rights Reserved. 11

12 Airline Channels and Payments

13 Global* Airline Passenger Revenue by Region (US$B), % 6% 6% 7% 7% 7% 31% 32% 33% LATAM Eastern Europe APAC Western Europe U.S. 29% 29% 27% 27% 26% 27% *Canada, MEA not included. Source: PhoCusWright s Payment Unsettled: Cost, Opportunity and Disruption in Travel s Complex Payment Landscape 2013 PhoCusWright Inc. All Rights Reserved. 13

14 Global* Airline Passenger Revenue by Channel (US$B), % 28% 29% 10% 10% 10% Airline Website OTA Direct Offline/Other Travel Agencies 17% 16% 16% 47% 46% 45% *Canada, MEA not included. Source: PhoCusWright s Payment Unsettled: Cost, Opportunity and Disruption in Travel s Complex Payment Landscape 2013 PhoCusWright Inc. All Rights Reserved. 14

15 U.S. Airlines: Website Revenue by Payment Method 93% 2% 1% 4% Source: PhoCusWright s Payment Unsettled: Cost, Opportunity and Disruption in Travel s Complex Payment Landscape

16 APAC Airlines: Website Revenue by Payment Method 5% 4% Credit Card 10% EFT 13% 46% Debit Card Cash/Check 22% Online Alternative Loyalty Redemption Source: PhoCusWright s Payment Unsettled: Cost, Opportunity and Disruption in Travel s Complex Payment Landscape

17 Indirect Airline Sales: ARC and IATA/BSP Indirect, 55% Direct, 45% Sources: ARC, IATA and PhoCusWright s Payment Unsettled: Cost, Opportunity and Disruption in Travel s Complex Payment Landscape

18 Global ARC/IATA Payment Method Mix Cash, 48% Card, 52% Cash, 51% Card, 49% Sources: ARC, IATA and PhoCusWright s Payment Unsettled: Cost, Opportunity and Disruption in Travel s Complex Payment Landscape IATA PhoCusWright Inc. All Rights Reserved. 18

19 Sales (US$B) Global ARC/BSP Sales and CAGR by Region for 2003 and % 4% 5% APAC U.S. Western Europe CAGR 14% MEA 10% South/Central America 19% Eastern Europe CAGR (%) Sources: ARC, IATA and PhoCusWright s Payment Unsettled: Cost, Opportunity and Disruption in Travel s Complex Payment Landscape 2013 PhoCusWright Inc. All Rights Reserved. 19

20 IATA Card vs. Cash Sales by Select Countries, APAC, 2011 Card Cash 43% 61% 77% 87% 99% 100% 57% 39% 23% 13% South Korea Australia Japan India China Indonesia 1% 0% Sources: IATA and PhoCusWright s Payment Unsettled: Cost, Opportunity and Disruption in Travel s Complex Payment Landscape IATA PhoCusWright Inc. All Rights Reserved. 20

21 ARC/IATA Average Price per Transaction (US$) by Region, 2011 $891 Cash Card $588 $652 $460 $310 $363 APAC U.S. Global Sources: ARC, IATA and PhoCusWright s Payment Unsettled: Cost, Opportunity and Disruption in Travel s Complex Payment Landscape IATA PhoCusWright Inc. All Rights Reserved. 21

22 Lodging: Pre vs. Post

23 Lodging Merchant Agency Source: PhoCusWright s Payment Unsettled: Cost, Opportunity and Disruption in Travel s Complex Payment Landscape

24 Has the Merchant Model Met Its Match? Source: PhoCusWright s Payment Unsettled: Cost, Opportunity and Disruption in Travel s Complex Payment Landscape

25 Pre Pay (Merchant) vs. Post Pay (Agency) Intermediary Mix of Hotel Bookings by Contracting Model, by Region North America Western Europe LATAM Asia Agency Merchant Eastern Europe MEA 0% 20% 40% 60% Base 708 travel retailers, 156 travel wholesalers Source: PhoCusWright s Payment Unsettled: Cost, Opportunity and Disruption in Travel s Complex Payment Landscape 2013 PhoCusWright Inc. All Rights Reserved. 25

26 Lodging Intermediaries Hotels Merchant Agency Source: PhoCusWright s Payment Unsettled: Cost, Opportunity and Disruption in Travel s Complex Payment Landscape

27 Is my client going to have a great experience? Am I going to get paid? Source: PhoCusWright s Travel Agency Distribution Landscape:

28 Percentage of Intermediaries with No Uncollected Hotel Commissions Less than $1M 47% $1M $5M 32% $100M $1B 17% More than $1B 15% Base 658 travel retailers, 134 travel wholesalers Source: PhoCusWright s Payment Unsettled: Cost, Opportunity and Disruption in Travel s Complex Payment Landscape 2013 PhoCusWright Inc. All Rights Reserved. 28

29 Source: PhoCusWright s Payment Unsettled: Cost, Opportunity and Disruption in Travel s Complex Payment Landscape Wouldn t you rather pre pay in full?

30 Three in Four Hotels Offer Pre paid on Websites Base N=73 hotels Source: PhoCusWright s Payment Unsettled: Cost, Opportunity and Disruption in Travel s Complex Payment Landscape

31 Pre paid Bookings Account for One in Five Website Reservation Dollars Base N=73 hotels Source: PhoCusWright s Payment Unsettled: Cost, Opportunity and Disruption in Travel s Complex Payment Landscape

32 The Cost of Payment

33 The Cost of Acceptance: Electronic transaction fees Global acceptance Fraud Unpaid/delayed Staffing resources PCI Travel Website Source: PhoCusWright s Payment Unsettled: Cost, Opportunity and Disruption in Travel s Complex Payment Landscape

34 Airlines: $7B Globally in Electronic Payment Fees Share of Payment Fees Share of PAX Revenue 1% Online Alternative BSP/ARC Cash EFT 29% 6% 4% Debit Card Credit Card 52% Sources: PhoCusWright s Payment Unsettled: Cost, Opportunity and Disruption in Travel s Complex Payment Landscape and IATA 2013 PhoCusWright Inc. All Rights Reserved. 34

35 Total Fees Paid to Accept Electronic Payments by Method and Region (US$M), ,500 3,000 2,500 2,000 1,500 1,000 Online Alternative ARC/BSP Cash EFT Debit Card Credit Card 500 U.S. EU APAC LATAM EE Note: Data excludes Canada and MEA Sources: PhoCusWright s Payment Unsettled: Cost, Opportunity and Disruption in Travel s Complex Payment Landscape and IATA 2013 PhoCusWright Inc. All Rights Reserved. 35

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37 Fraud Travel Payments Concerns Card Fees Mobile Payments Settlement Windows Reconciliation Global Currency Management Taxes/fees New Card Technologies/Standards PCI

38 Airline Website Global Fraud Rate: 1.1% Fraud rate here includes zeros airlines who report no fraudulent bookings on their websites Source: PhoCusWright s Payment Unsettled: Cost, Opportunity and Disruption in Travel s Complex Payment Landscape

39 2013 PhoCusWright Inc. All Rights Reserved. 39

40 Retailers: Methods Used to Track Hotel Commissions Staff manually track all bookings, invoices and accounts receivable Wholesaler Run regular reports from our accounting/back office system Use a commission settlement service OTA Trad. Travel Agency TMC 0% 20% 40% 60% Base 657 travel retailers, 134 travel wholesalers Source: PhoCusWright s Payment Unsettled: Cost, Opportunity and Disruption in Travel s Complex Payment Landscape 2013 PhoCusWright Inc. All Rights Reserved. 40

41 Staffing and Weekly Hours Spent on Payment Functions Weekly Hours per Staff Staffing (median) 5 0 $1M $5M $5M $25M $25M $100M $100M $1B More than $1B Travel Companies by Gross Travel Bookings Base: Total 1,244 respondents Source: PhoCusWright s Payment Unsettled: Cost, Opportunity and Disruption in Travel s Complex Payment Landscape 2013 PhoCusWright Inc. All Rights Reserved. 41

42 The Cost of Acceptance: Electronic transaction fees Global acceptance Fraud Unpaid/delayed Staffing resources PCI Travel Website Source: PhoCusWright s Payment Unsettled: Cost, Opportunity and Disruption in Travel s Complex Payment Landscape

43 Questions? Douglas Quinby Principal Analyst, PhoCusWright