Four reasons why credit is given too much credit | eNett


May 5, 2016

Over the last few years the travel industry has seen rapid and dynamic changes. There are new economic and competitive pressures, business models and technologies that are prompting travel companies to change their business practices to better match the new landscape. 
However, one area which is often overlooked by travel companies is payments. Credit is the default choice, whether that’s lodge cards, company credit cards or customers’ personal cards. But in today’s travel landscape, do the benefits of credit really stack up when compared to alternative payment methods? Here are four reasons why I think credit is given too much credit.
1. Shorter payment terms
Before the credit crunch, access to credit was easy with travel companies able to negotiate 60-day payment terms with suppliers. Those days are unequivocally over. Payment terms are much shorter, and even though the global economy is recovering, news of emerging markets not living up to expectations will continue to make access to credit difficult. All this means that credit is becoming less beneficial and attainable for travel companies.
2. It increases the cost of payment
Paying on credit also involves fees and interest increasing the cost of payment for travel companies. This is especially costly for international payments, where travel companies can end up on the wrong side of currency fluctuations. Having to set-up banking arrangements in foreign jurisdictions can also be time, and money, consuming. One widely used option is to pass customer credit card details directly to the supplier, but this brings no tangible reward for the agency. 
3. Discounts for immediate payment
Added to this, the rise of the Low Cost Carrier model, coupled with more digitally savvy consumers using comparison sites, has led travel suppliers to focus on optimising inventory. One prevalent tactic is to offer big discounts on fares and rates that are settled at the point of booking. 
Taking advantage of these discounts requires immediate payment methods. Using traditional cards is an option, but sharing card details increases fraud risks, and multiple transactions on a company card can cause problems with reconciliation. Using customers’ cards to pay makes travel companies responsible for any fraud or misuse of the customer’s card details by the supplier. 
4. More rewarding alternatives 
Today, there are innovative solutions which seamlessly integrate with booking and accounts payable platforms, enabling payment from within the workflow and automating reconciliation. What’s more, there are options which return a rebate on transactions for money back on your payments. And in an industry where fraud is a top concern, what value would you put on having a lower risk payment method? 
It’s time to get real about credit, and do the calculations. Ask yourself “do the benefits of credit outweigh the efficiency, revenue and lower risk benefits of alternative payment methods?”


Anthony Hynes
Managing Director & CEO

More Blog Posts

26 January 2017

Changing lives in Cambodia

We’ve been privileged at eNett to have benefitted greatly from the travel industry. But there’s always been a desire to give something back, and use the travel industry to make a real difference in the lives of people less fortunate. Last year we put this into action through the creation of our social responsibility programme ‘Repay the eNett Way’. The Repay the eNett Way initiative was designed to support people impacted by greater globalisation and tourism. We didn’t want to simply donate to charity, but take a direct hands-on approach, shinning a light on the unique challenges and pressures experienced by underprivileged communities around the world - and making a difference to the lives of people living there. With this in mind, Cambodia, with its high travel industry growth combined with high levels of poverty, was the first country chosen. I’m a firm believer in the proverb “Give a man a fish and you feed him for a day; teach a man to fish and you feed him for a lifetime.” The power of education in changing lives was a key tenant of our programme. Through our sweet sales, charity bingo and other little events we helped Sreng, a resident of the underprivileged community of Phnom Penh, to qualify as a tour guide. Now he has a new profession and means of income to support his family. We also used the money to provide a scholarship for Lavin to learn English at one of the top schools in Cambodia. Forced to live in care with his sister and brothers, on his own Lavin would have struggled to break the cycle of poverty. Now Lavin will fulfil his ambition of becoming a translator, improving not only his prospects, but those of his future family. It’s amazing to think our spare change in the first world can instigate generational change in the third world. In a few weeks’ time, eight of our team will travel to Cambodia and immerse themselves in the disadvantaged community of Phnom Penh. Getting truly hands-on, our volunteers will be launching new initiatives there, and seeing first-hand the results of their fundraising by meeting the people whose lives they have helped changed. Having gone through a social responsibility initiative for the first time, I would wholeheartedly encourage other companies to do the same. The enthusiasm, creativity and generosity that came from all areas of the company has been amazing. It has been an enriching experience for everyone involved and we’re already looking forward to surpassing our achievements with the next iteration of the programme.

Read more

12 December 2016

The currency conundrum

2016 has seen a number of significant international events. Arguably two of the biggest were the UK’s decision to leave the EU, and the USA’s decision to elect Donald Trump as President of the United States. The long-term implications on the travel industry remains to be seen. But one of the immediate effects was on currency rates. Following BREXIT the pound dropped to a 31 year low. The day after election night, the US dollar plunged. International travel agencies whose transactions settled on those days, could have seen their profit margins evaporate overnight. With further uncertainty ahead and increasing consumer demand for ever more far-flung destination, managing international transactions and protecting from currency fluctuations should be a key priority for travel companies in 2017. Demand for exotic and unusual holiday destinations has meant today’s travel companies are operating more globally than ever before. The latest Phocuswright research showed that the number of travel companies accepting payments in more than ten different currencies has doubled from 6% to 12% in the past three years. And 6% are now doing business in over 50 different currencies. Although this presents huge opportunities when it comes to global expansion, it comes at a price. Foreign exchange and cross-border fees as well as more admin increases the cost of payments. And when you’re dealing with 50 currencies, the risks of currency fluctuations eating into your margins are high. So how can travel companies reduce costs and risks? The first step is to re-examine your cross-border payment strategy. Modern trends require modern solutions. Too many travel companies stick with traditional methods for international transactions. But what they don’t know is that a lot of the costs of international transactions are ‘hidden’ fees and charges. In fact our analysis shows travel companies relying solely on banks could be spending 3% more on international transactions compared to alternative methods. Secondly, look for FX options that give you control over rates to reduce costs. Solutions offering local funding and settlement significantly reduce the cost of payments, and eliminate the need to set-up expensive banking arrangements in each jurisdiction. And real-time conversion allows agents to lock-in rates at the time of booking – protecting from currency fluctuations. Implementing an effective cross-border payment strategy is a must if travel companies are to effectively meet the destination demands of today’s consumers, while remaining profitable.

Read more

03 November 2016

Have we reached the tipping point for virtual cards?

When it comes to B2B payments in the travel industry, traditional payment channels have been challenged by innovative alternative payment methods. But how much impact have they had? New research by Phocuswright on payments in the European travel industry shows that things are changing - and when it comes to Virtual Cards or Virtual Account Numbers (VANs) the momentum for change is faster than ever. The last time Phocuswright carried out a payments study was in 2013. Three years is a long time in technology, so in partnership with Phocuswright we wanted to find out how much innovative technologies like virtual card had disrupted the industry. We weren’t disappointed. The research outlined a definite shift away from traditional payment methods by the travel industry, with Virtual Card the biggest beneficiary. Support for VANs has more than doubled, from 26% in 2013 to 55% in 2016 representing a huge step-change in adoption. In fact, the research showed support for VANs amongst larger agencies has already overtaken traditional methods, with 71% supporting VANs, compared with EFT (62%), cash (52%) and cheque (42%). And when it comes to paying hotels and accommodation, travel companies of all sizes cited VANs as the most popular method of payment (24%), second only to traditional credit cards. Is this the sign of things to come? Three years ago, the Phocuswright report deemed VANs and virtual card technologies outside of the ‘conventional’. Today VANs have firmly established themselves as part of the new normal for agencies and suppliers alike. More and more travel companies are realising the cost and efficiency benefits alternative methods can bring, all by simply changing the way you pay. I believe in the 2019 study we will see VANs overtake EFT and cheque overall when it comes to preferred payment methods, with cheques driven close to extinction. As for the rest of the world, there’s still work to do in terms of educating and supporting the global industry to realise the full benefits of alternative payment options. But change will come. VANs have reached their tipping point, and B2B travel payments are one step closer to truly frictionless payments.

Read more

04 October 2016

Payments: more than just a number

Have you ever thought about what those 16-digits on a credit card mean, and more importantly, the information that these numbers are giving away? Each number, or groups of numbers, represent the type of card, the network provider and the issuer. But what if the numbers could be used to convey so much more…I was recently asked what advances in payments we should expect in the next five years. For me, when it comes to transactions, it’s all about data! In a world where ‘big data’ is seemingly endlessly talked about, the value of information has never been higher. For example, MasterCard has a dedicated analytics centre to analyse the 10 petabytes (a million gigabytes) of transaction data globally to identify spending trends. But what if the card number itself could carry a discount code, confirm trading terms, as part of a commercial agreement between a supplier and an agent?When it comes to traditional credit cards with their static single number, this wouldn’t be possible. But as virtual cards are digital and unique to each individual transaction, this isn’t beyond the realms of reality. Nor is it in the distant future. I can see a time where Virtual Account Numbers can be embedded with code reflecting the commercial agreement between an airline and consolidator for example, or an OTA and a hotel. We already have an agreement with a major supplier, which will see agents who pay by VANs have the surcharges applied to traditional credit card payments reduced. As transactions increasingly become digital, I’m excited about the future possibilities of Virtual Account Numbers, and the value they can bring beyond the transaction amount.

Read more

02 September 2016

What can C2B learn from B2B? | eNett

I was recently asked, “what can consumer-to-business payments learn from business-to-business?” It’s a great question. During my conversations with journalists over the years, and what I hear being discussed in the industry, it’s usually the other way round. C2B payments are often seen as the peak of innovation, but there are areas in B2B payments, which are far more advanced. One of those areas is payment control. FinTech’s focus on making payments as easy as possible comes with a drawback - loss of payment control. Chip and Pin was brought in to make card payments more secure. Yet today, you merely need to wave the card to make a transaction. What’s more, you have little control over transaction limits, which are set by the bank, and can be used for multiple transactions without a daily cap. Could you set a daily cap even if you wanted to? That wouldn’t work for B2B. When it comes to travel supplier payments, control is king. It’s no wonder with thousands of transactions happening daily, across multiple regions, suppliers and channels. Travel companies want as much control as possible over their transactions to guard against misuse, protect from fraud and ensure accurate reconciliation. A lot of innovation in the B2B space is focussed on control. The best payment solutions offer unlimited user-defined reference fields so you have rich data on what was paid, when and to whom. Today’s solutions also allow travel companies to set payment parameters based on value, date range validity and even merchant category code. For me anyway, I’d love to be able to veto which websites my family is able to use our credit card at. It might cause some a few ‘tantrums’ in the house, but it’d certainly help ease the pain I feel when I look at my statements each month. I’ve seen some apps that help when it comes to spending discipline. But it’s clear, when it comes to payment control, consumer payments can learn a lot from B2B.

Read more

30 August 2016

Taking the friction out of payments | eNett

A lot of people attribute the success of Uber to its User Interface. For me, it’s all about the hassle-free or ‘frictionless’ payment experience. You press a button on your phone, wait for car, reach destination, exit car. That’s it. No cash, no cards, no signing receipts. A great end-to-end customer experience, made possible through the seamless connection of the front-end interface with back-end payment systems. Uber successfully illustrated how important simple, hassle-free payments are to customers. As a result, we are witnessing huge developments in reducing the friction of payments even further. Earlier this year, MasterCard launched its ‘selfie-pay’, where you can pay bills by taking a photograph. But what about C2B2B? Why can’t we see the same one-touch frictionless payments that we are seeing in the consumer world right though the value chain? Commercial payments are a lot more complex compared to consumer payments. Consumers make a handful of payments each week, but travel companies handle and reconcile thousands of transactions a day. Added to this is greater international travel, compounding costs, risks and complication. And these transactions require a lot more data than consumer ones.There are innovative technologies that are significantly reducing the friction points through automation and seamless integration between the booking and payments workflows. We may not be delivering the ‘Uber-level’ payments experience today, but simple, hassle-free C2B2B payments are not something you should be waiting for…they’ve already arrived. 

Read more

09 August 2016

Top 4 payment habits eating into agency margins | eNett

Most executives would agree on the importance of change and constant evolution for businesses to remain competitive. Yet when it comes to supplier payments, methods are based on habits with little progression in the approach. With an ever-changing travel landscape, I thought it’d be useful to highlight some of the key bad habits that we see all day every day, that are undoubtedly costing travel companies money: 1. Using credit as the default form of paymentCredit is the default form of payment for many organisations. But in today’s increasingly regulated financial landscape with stricter controls on lending, access to credit with favourable terms is harder to come by. Travel companies often find themselves reaching credit limits, especially in peak season. Not only is this a nuisance, but also causes dynamic rates and immediate payment deals to be missed. It causes friction, disrupting the momentum or rhythm of the company. The less payments friction you have, the more transactions you can do – get rhythm, get scale! 2. Passing-through customer cards for payments“Avoiding payment fees” by passing-through customers’ cards for payments to suppliers is still common practice. But think about it, when you pass-through customer cards, you’re also passing on the customer experience. What if the supplier misuses the card details, won’t the customer hold you accountable? And, separately charging fees for your services rather than bundling them with the costs of travel could be encouraging your customers to go direct next time, ultimately impacting your repeat business. 3. Viewing supplier payments as a necessary evilPaying suppliers is often seen as a necessary evil and nothing more. But adopting innovative payments solutions can streamline processes for cost and time savings, and generate tangible rewards on transactions. Supplier payments can be transformed into a new revenue stream if travel companies are willing to break their habits and change their approach. According to our cost of payments calculator, an OTA transacting US$100M could make savings of up to US$1.4M just by changing the way it pays.4. Always doing what you’ve always done – the “can't be bothered” syndrome! I hate the phrase ‘if it ain’t broke, don’t fix it’. Too many people get comfortable and become resistant to change, or just “can’t be bothered”. But making small changes can reap huge rewards. I have an OTA customer who was able to increase its business by a factor of 50 without having to take on additional accounts resource by simply automating its payments processing and reconciliation. Supplier payments can be transformed into a new revenue stream if travel companies are willing to break their habits and change their approach. 

Read more

06 June 2016

Top strategies for optimising your payments | eNett

When asked to identify potential areas for efficiencies, payments might not be top of mind. But taking a deeper look into the cost of payments can unveil a huge opportunity for savings. A common error travel companies make is failing to look beyond the direct costs. The true total cost of payments should include indirect costs such as manual reconciliation and fraud risks. The most effective cost saving strategies are those that address both the indirect as well as direct costs. Having advised travel companies around the world on their payments strategy, I’ve put together my top tips for lowering costs and optimising your payments.1. Reassess how you make cross-border payments For many travel companies, the costs of cross-border payments are exacerbated by exposure to FX fluctuations, fees and mark-ups, most of which are not transparent. Getting on the wrong side of foreign exchange could see your margins evaporate by the time it gets to settlement. It’s no wonder that our own analysis of bank fees and charges shows travel companies could be spending up to 3% more than they need to on each international transaction. There are innovative solutions available that provide a more cost-effective solution to traditional methods. Look for options that allow local funding and settlement to avoid surcharges and fees. But make sure you get clarity on how much mark-up your provider adds onto transactions. For FX, look for an option that gives you control of FX timings and rates, to best match the needs of your organisation. 2. Automate payments processing and reconciliation Manually processing and reconciling transactions is time consuming, error-prone and costly. Our own estimates put the cost of manual processing and reconciliation of up to US$6,000 per week for some travel companies. With solutions out there to automate the payments process, it’s an easy win. But the level of automation, and therefore cost saving, is dependent on the level of integration. The best solutions are those that seamlessly integrate with back-end accounts and booking platforms, optimising efficiency by allowing payments within the workflow. And don’t settle for automated reconciliation, but reconciliation that comes with detailed reporting options for rich data and greater payments clarity. The cost and ease of implementation should also be included in your vendor assessment. Savings from low cost implementation may end up being wiped out if on-going support costs or more bespoke configuration is charged. And complex integration may cost you in terms of downtime disruption – there’s always an opportunity cost. 3. Mininimise your fraud risks and protect yourself from supplier default The cost of fraud can be significant. In the airline industry alone, the cost of card fraud is estimated at US$1 billion a year1. And how costly is the loss of reputation and good will should a customer’s card be misused or details hacked? Demand more security from your method of payment. Ask your vendor if you can set payment parameters for greater control of payments. Look for solutions that provide payments guarantee, and chargebacks in the event of supplier default. Or why not chose a solution which eliminates the traditional physical card altogether? 4. Choose a payments strategy that brings value to your businessHaving funds tied up in bonds brings little benefit to your business. Choosing the right payment option can enable you to reduce the bonding requirement, unlocking cash to be used for growing the business. If dynamic rate discounts are an important part of your business strategy, choose a flexible immediate payment option that can optimise your costs savings.Taking time to sit down and really assess your total cost of payments can return rich rewards, and there are tools out there to make this even easier. Our Account Managers offer an unrivalled set of travel knowledge and payments expertise. They regularly meet with our customers, armed with data to provide real insights to help them achieve their business goals. To make it even easier, we developed a calculator tool in collaboration with KAE Associates that provides even more clarity. And because we believe in transparancy, it's available to everyone, industry wide.I encourage you to challenge your vendors, reassess your strategy, and look to the real cost of payments to make a tangible impact on your company's bottom line.1. Travel Payments Insider Issue 2, November 2014: The Mobile Traveler – Convenience vs. Security

Read more

05 April 2016

When will the fintech revolution reach b2b payments | eNett

The last few years have seen an explosion in payment innovation - whether that’s the rapid expansion of “tap and go” contactless cards or Mobile Wallets from tech giants, Apple and Google. We are seeing countries like Denmark taking steps to becoming cashless, with the government announcing a proposal scrapping the obligation for retailers to accept cash as payment. And across the world making payments for consumers is quicker and easier than ever. The message coming out from Silicon Valley is clear: FinTech is hot property. So why, when it comes to B2B payments, have we yet to see the kind of technological revolution currently shaking up the consumer payments world? This is none more apparent than in the travel industry. Paying travel suppliers is still heavily reliant on manual processing and paper, with some suppliers still requiring confirmation by fax. Different types of suppliers require differing payment methods through multiple systems – none of which are connected to each other. And after all those thousands of transactions have been made, comes the manual reconciliation. It is estimated that the time and money wasted on manual payments handling and reconciliation costs the global travel industry in excess of US$1.5 billion each year. It doesn’t have to be this way. And the good news is Travel Companies don’t need to wait. There are already technology solutions out there that, through integration, join up the multiple systems and automate the payments and reconciliation process, while also eliminating error-prone and inefficient manual constraints.So what’s the hold up? Payments in the travel industry are complex, relying on aging technology and embedded processes. In fact it was this complexity and the desire to simplify it that first inspired me to build eNett International. The travel industry has been reluctant to let go of the established ways of doing things. However, the rise of the Online Travel Agent coupled with changing consumer habits and a more digital world are making suppliers change the way they sell - causing travel companies all over the world to reassess the way they pay.I firmly believe that the next 10 years in travel will see more innovation in B2B payments than we’ve seen for the last 30. The B2B payment revolution has already begun and I’m excited to be able to help our customers take advantage of it.Anthony HynesManaging Director & CEO 

Read more