By Anthony Hynes, Managing Director and chief executive, eNett International
The news that Monarch Airlines has ceased trading is distressing for thousands of travellers, employees, travel agents and operators connected to the company. Monarch is the UK’s fifth biggest airline and its move into administration is expected to impact 860,000 people who have lost bookings, 110,000 holiday makers currently overseas, its 2,100 employees as well as numerous suppliers and partners. It’s no wonder that 40% of the travel industry cite supplier default and fraud as major concerns.
By definition, the travel sector involves large volumes of future bookings, with suppliers in numerous countries and different currencies. As a result, an issue affecting one company can quickly have a knock-on effect on many other individuals and businesses. Despite the inter-connected nature of the industry, many travel companies still use traditional cash payment methods or book with suppliers and settle later, which increases their exposure if the market shifts and of supplier default.
But by simply picking the right payment method can significantly reduce the risks of supplier default. For example, modern payment methods like Virtual Account Numbers (VANs) automate payments, providing a verifiable digital record of transactions and the sophisticated chargeback capabilities which allow funds to be claimed in the event of supplier default. Something which is not possible with more traditional forms of payment such as cash.
Earlier this year All Leisure Group, the company which owned cruise lines Swan Hellenic and Voyages of Discovery, ceased trading leaving one Australian travel wholesaler facing a potential loss of US$190,000 from the liquidation. However, as the wholesaler had paid with VANs, the eNett team were able to recover all the funds within nine days through chargebacks. Not only did it protect the travel company, but also its customers too.
Fraud is also a significant issue for the travel industry. The International Airport Transport Association (Iata) has estimated that fraud is costing airlines up to $1 billion a year and the Association of British Travel Agents (Abta) reports that travel fraud is up 425% year-on-year. The most common examples are ‘card-not-present’ fraud and scam or cloned websites.
Use of VANs has grown exponentially in the travel industry and one of the reasons is simply it’s a safer way to pay. It replaces a single credit card number, with a 16-digit Mastercard number generated uniquely for each transaction. You can also add a wide number of payment parameters for greater control, including restricting the VAN by merchant category code. A digital solution to minimising the risks of fraud.
Consumer demand for travel to increasingly far-flung destinations will continue and this requires companies to transact with more suppliers in more currencies than ever before. At the same time, a complex range of economic and political factors is increasing the commercial pressures on airlines, hotels, tour operators and travel agents. Modern payment options provide a means of catering for this consumer trend, whilst minimising operational cost and business risk. Protecting your travel business and customers is as simple as changing the way you pay.