The global travel industry generates approximately $1.4 trillion in revenue annually and, in doing so, spends 5.4 percent of its revenue processing payments. In fact, worldwide airlines, travel agencies and hotels spend some $75 billion per year to pay their payment service providers. That’s as cheap as it gets, too, because switching to in-house payment systems can cost them even more.
To mitigate these costs and meet the growing customer demand for newer, faster payment options, global travel companies are gearing up to undergo a fundamental restructuring of their payment systems and begin their innovation endeavors. Even with all the benefits to gain from innovation, though, only a small portion of them have rolled out successful projects so far.
So, what is preventing travel companies from making the necessary changes to enhance their payment systems, and how are they tackling these problems?
Our research suggests many were wary of the short-term costs of innovation, but it seems travel companies are finally deciding to invest in innovations. Sixty percent said the revenues generated would either be larger than innovations’ costs, or would decrease their costs overall.
The Travel Payments Study™, in collaboration with Amadeus, analyzes survey data collected from an assortment of travel companies — including major airlines, online travel agencies and hotel chains — to discover the market forces driving travel payments and analyze operators’ shifting outlooks on payment innovation.
Other notable findings in the report include that:
- Four out of 10 travel operators struggle to manage multiple payment service providers.
- Eighty-two percent of travel companies innovate to combat the loss of customers.
- Thirty-six percent of travel companies expect innovations to decrease costs.
- Global travel operators spend $75 billion annually to pay payment service providers.
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