March 12, 2020
I recently attended the 2020 Airline & Travel B2B Payments Summit Special in London and participated in a panel discussion on simplifying B2B Payments. It was great to catch up with industry peers and share my thoughts on the growing shift towards large travel agents adopting the merchant model. There are so many benefits from using this model – not just for travel agents but everyone in the travel value chain, including airlines and the end traveller.
Understanding the merchant model
Typically, the travel industry has used the agency model for B2B payments – where the card details for customers who purchase airline tickets, were passed onto the airline for processing. However, escalating payment fraud and demand for a better customer experience have placed that model under pressure.
Increasingly, large travel agents are responding to changing customer and industry expectations by moving to the merchant model, with many using eNett Virtual Account Numbers (VANs) to support supplier payments.
Under this model, the travel agent collects one single payment from the customer and then makes a separate payment with a VAN to each airline or supplier. This means the travel agent continues to be an agent for airlines and also becomes the merchant of record for the inbound customer payment. The travel agent manages all costs and risks and can invest in the latest technology to provide secure and seamless payments, including accepting customers’ preferred payment methods.
In a nutshell: The benefits of operating a merchant model with eNett VANs:
Why alternative models don’t work
Whilst there are alternative models, these have significant shortcomings. For example, some costs and complexities can be hidden, including indirect costs. For airlines, these can stem from settlement delays, impacts of fraud, increased customer payment costs, risks from agency default, unnecessary friction in customer experience, and distribution relationships. Not to mention constrained sales and added operational cost and complexity, which is a lot to deal with for a sector that’s already under significant pressure.
The future of the merchant model
In an increasingly competitive and pressured industry, the advantages are clear. With a travel agent acting as merchant, this model benefits all parties in the value chain. It completely protects airlines from the costs and risks of exposure to fraud and delivers a seamless payment experience for their customers.
eNett is committed to working with airlines, travel agencies and other stakeholders to provide payment solutions that benefit all participants in the travel value chain.
Have a question about how the merchant model with VANs benefits both travel agents and airlines? Get in touch.