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Across last year, we saw travel make a comeback. In fact, the United Nations World Tourism Organization (UNWTO) reported 250 million international arrivals, a 46 percent increase compared with the 77 million arrivals reported between January and May of 2021.
However, airports and airlines across the globe have not been able to meet the growing demand, resulting in many cases of canceled flights and disgruntled travelers.
Travel agencies are caught in the middle of this disruption, but there is a way for travel agencies to take more control of the customer experience as we move into 2023; primarily through how they handle payments for their customers' bookings.
The industry as a whole went through over two years of travel being significantly down because of the COVID-19 pandemic. However, when many countries came out of lockdowns, we heard many consumers talking about "revenge traveling". This coined phrase was reported on in national news last year. It was used to describe trips as varied as family reunions, big splurge vacations and re-visits to favorite places, and rather than having a negative connotation, it was quite the opposite. It seemed to be more about customers expressing their love to travel.
Unfortunately, the travel industry wasn't prepared for this. Whether it was airlines with not enough pilots and flight attendants because they had laid people off, or the TSA with not enough transportation security officers, everyone was trying to play catch-up at the expense of the traveler.
Often travel agencies don't get involved in the payments stream. They might sell a flight or hotel stay to a traveler and take that credit card number from the customer and give it to the airline or hotel, who then processes the card and ultimately pays the travel agency a commission down the road. However, when that commission is paid can vary, and there is no guarantee that your commission will be there when you need it. In this case, the airline or hotel is the 'merchant of record' (MoR) in the transaction - they carry out card processing, and it is their name that will be on a customer's statement. It has been set up this way over the decades for many reasons, but we believe there is a better way that can allow travel agents to have more control over their own brand and their customers' experiences.
Becoming MoR offers travel businesses an alternative to building their own payments stack so that they can focus on crafting their product and winning customers rather than on the mechanics of how and when they get paid. It means that travel agencies can get paid instantly and then pay for flights and hotels directly on behalf of customers, keeping the profits instead of waiting for commissions to be paid by the dozens or even hundreds of companies they may do business with.
Overall, becoming an MoR means being able to serve customers better, obtaining stronger brand visibility and gaining control of the customer experience.
By bringing together the two sides of the payments process - accepting and making payments - into one unified platform, travel agents can easily become merchant of record and gain control of end-to-end transactions, which also allows them to retain their chargeback rights for the payments they make to suppliers.
An all-in-one payments solution would provide travel agencies with instant access to incoming customer funds, which they can use to immediately pay suppliers. Since both sides of the transaction are connected inside a single platform, travel agencies are able to realize the benefits of reduced risk, including lower cost of payment acceptance.
Additionally, such a payment solution would allow travel agencies to maximize cash flow. With immediate access to their incoming payments, they can immediately apply those funds to outgoing travel suppliers, with no need for lines of credit. This model is consumer-friendly, agency friendly and most importantly for this year, safer for all parties in this post-pandemic era of travel.
Bob Kaufman is the Founder and CEO of ConnexPay. Bob started ConnexPay with a passion to remove pain and friction, and a clear purpose to improve the customer experience of paying and getting paid. His strategic foresight and visionary leadership have built ConnexPay into a company that now serves a multitude of businesses spanning several industries globally.
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