This is part of a series of articles exploring the technology and potential behind online payment systems. We’ll look at automation, increasing profitability, maximising security, and examine the behaviour that underpins different payment trends in the travel sector. If your business operates in the travel and hospitality sectors, or if you just want to get a deeper understanding of online payments and how to optimise them, you’re in the right place.
The travel industry has a bad habit: it can be pretty slow on the uptake when it comes to adapting itself to new technologies. Even today, travel operators are often stuck a few years in the past when it comes to their ability to handle payments via the latest, greatest, and trendiest methods used by consumers. The advent of online travel agencies and so much business shifting online is gradually forcing that to change, though, which means more and more travel operators are having to contend with the intricacies of travel payment processing than ever before.
Key to understanding the new world of electronic payments is to the understand the role and function of payment service providers. Payment providers act as facilitators in the travel payment process, securely handling customer payment info and facilitating the completion of payments by a variety of means (card, e-wallet, etc.). While not everyone needs the services a provider offers – very small, locally-focused businesses can probably make do without – the benefits they offer to mid-size and larger businesses can be enormous. Providers function as acquirers, meaning they are able to conduct interbank transactions themselves, and work with a great many banks simultaneously, working directly with international payment systems without having to go through intermediaries. A godsend for larger businesses that have to deal with a wide array of payment scenarios.
The magic bullet that payment providers wield when it comes to travel payment processing is the VISA/Mastercard Principal Member certification. Providers that hold it are confirmed compliant with the myriad security strictures that regulate access to international payment systems, meaning they can work with those systems directly. Because the payment provider acts as an acquirer itself, it is able to save time and money for its business partners by bypassing the hassle that utilising a third-party acquirer brings. It becomes much easier to establish a broad travel industry payment processing solution for the internet era when you cut out these kinds of unnecessary and extraneous steps.
The key technical offering a payment service provider brings to the table is the payment gateway. You’re almost certainly familiar with payment gateways to some extent, you use them pretty much any time you enter your card details into a checkout page. For businesses, though, the payment gateway is much more than a few text boxes. On the one hand, it’s a versatile payment acceptance machine, enabling businesses to accept payments across a diverse array of regional methods, from the standard Visa/Mastercard to things like Skrill or Telepay. That can be important for travel businesses in particular, as you’re regularly dealing with a mish-mash of payment systems as you help customers from around the world. On the other, it acts as a security bulwark, offering fraud detection systems and countermeasures that can be used to minimise the risk of malicious behaviour that doing business online sometimes carries.
In some instances, providers offer “boxed” (i.e. uncustomised) gateways. That means a set of pre-configured anti-fraud systems and an unmalleable list of accepted payment methods. Those systems can work decently, but it’s generally a much better option to work with providers who can spare you the time and effort required to hand-tailor their solutions to your specific needs. Fraud filters that are set to recognise the most pressing threats affecting your particular business are inevitably more successful (and less prone to false positives) than fraud filters with more generalised settings. Likewise, having experts on hand to guide you through the process of setting up your shiny new gateway is always helpful, and some providers will even lend you the expertise necessary to grow your business into new regions (with new payment preferences).
Speaking of growth, it’s best to keep in mind the volume of payments you handle (and expect to handle in future) when picking out a provider. Travel payment processing is an intensive task, and is only going to get more and more laborious as your business grows. That’s why some providers lease the processing capacity of commercial data centres to ensure they can process the thousands, tens of thousands, and hundreds of thousands of transactions they have to deal with every second. Some even enlist the capacity of multiple data centres, to protect themselves against power failures or other technical hiccoughs. It’s vital to pay attention to those details as a growing business.
So who needs a payment provider? Most people, it turns out. Sure, very local businesses, like a B&B on the Isle of Bute that mainly welcomes UK guests, might do best to just partner up with a local bank, but any business with a grander scope and ambitions to grow are better suited to the flexibility a provider, well, provides. Those looking to service customers from across the world need to be able to accept a range of payments from across the world, and protect themselves from a range of fraudulent behaviours from across the world.
So how do they pick a provider? Keep your eyes peeled for our next article, where we’ll cover all that and more!