Travel is never boring — if it is, you are doing it wrong — and that holds especially true when it comes to how travel connects to payments and the broader world of commerce.
And what a time it’s been, including for cross-border payments and the travel industry — the main subject of a fresh PYMNTS interview with Peter Butterfield, chief compliance officer at Flywire, which provides global payment services. He discussed what’s coming next as significant changes are taking place with travel and travel payments.
One of those changes involved industry powerhouse and innovator Airbnb. As politicians in the U.K. try to untangle the Brexit knot, the high-profile sharing economy operator is moving its E.U. processing operation out of the U.K. and over to Luxembourg. Other payment players have made a similar move as they worry about how to serve their European and global clients best after the U.K. leaves the European Union, assuming that happens.
“My guess is they are trying to shift over in advance of the Jan. 31 deadline (for Brexit),” Butterfield told PYMNTS. The general idea for payments providers and travel players, along with other companies, of course, is to make sure they give their customers confidence that they are ready for a post-Brexit payments landscape and can make required moves as efficiently and transparently as possible. “A lot of it is ensuring customers that you have your house in order,” he said, a job perhaps tougher by the political chaos and uncertainty surrounding Brexit.
Of course, that’s not all going on the travel world, though this Airbnb move promises to be influential. As global travel keeps on growing — the industry is worth an estimated $8.8 trillion or more annually when measuring its impact on the global economy — and more consumers travel outside their home countries — a trend especially notable among the middle and upper classes in China — cross-border payments are having to keep up with all that new demand.
Indeed, as PYMNTS research has found, four out of 10 travel operators struggle to manage multiple payment service providers. That’s not all, though. The research also found that 82 percent of travel companies innovate to combat the loss of customers and that 36 percent of travel companies expect innovations to decrease costs. Overall, the global travel industry pays $75 billion on its payments structure every year.
And as all those trends play out, there is an associated trend involving the growth of B2B cross-border payments as well. The issues are roughly the same, though nuanced, depending on the market. As Butterfield told it, the goals going forward into 2020 for cross-border payments include constructing a robust and clear and accurate cross-border payments system. “Reconciliation, billing and collection practices must work in a seamless fashion,” he said. “You must have appropriate reconciliation methods in place, so you are [not] suffering from being short on dollars, pound, pence or whatever.”
But that’s hardly the only concern going forward with travel into the 2020s. Trust is a big issue.
Recall that just a few weeks ago, for instance, the collapse of long-standing U.K. travel firm Thomas Cook, which left some 600,000 people stranded overseas. With a $2.1 billion debt pile that fettered its response to nimble online competitors, the company could not keep up. According to The Guardian, the collapse is “is not because the British have stopped taking holidays.” It was noted, though, that city breaks have very much outstripped beach vacations. Those that benefit are easyJet, Airbnb and Ryanair, while those that stand to lose are package holiday firms, per the report.
“That was a trust issue, not a payments issue,” Butterfield told PYMNTS, though trust will be vital as the industry continues to undergo disruption and innovation, including via the sharing economy but certainly not limited to that. That said, few things can build trust with travelers than having a cross-border payment system that works well and offers security and the peace of mind that comes from that.
And that, if nothing else, is the lesson for travel businesses going into the new decade.
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