Blockchain and Cryptocurrency in Travel Industry: What Are the Benefits and Perspectives?
The travel industry is the second-fastest-growing sector in the world (the first is manufacturing). According to the World Travel and Tourism Council, last year travel and tourism grew 3.9 percent, meanwhile, the global GDP growth is 3.2 percent. The travel industry comes with proper resources to integrate new solutions and technologies that can evaluate the growth process. The blockchain technology and cryptocurrency can expedite and make the traveller’s experience more comfortable. Moreover, it makes the work of employees more effective and helps to reduce excessive costs. How the blockchain technology is changing the travel industry — see the answer in our material.
Today’s Situation
The salient feature of the travel industry is a various number of third parties, as a result, the end-user — tourists — have to pay huge commissions, although they don’t even bother. Furthermore, the long chain of intermediaries causes delays, overbooking, mistakes, and other serious problems. Travel companies started to integrate blockchain and cryptocurrency projects a few years ago to prevent such issues. We can name several main areas of using blockchain technology in the travel industry which is improving travel business even now.
Cryptocurrency as a payment method
Cryptocurrency is still not widely accepted globally, but even today more and more companies accept Bitcoin and other digital currencies for goods and services both online and offline. For travelers, such payment option has become a way to circumvent costs of currency conversion, ATM withdrawals fees, transaction fees and fraud risks that come with international credit card use.
Speaking of which, let us remind you of our previous article, where we compare two payment methods: credit cards and cryptocurrency to discover which one is the safest.
And here are some examples of travel agents that accept cryptocurrency.
CheapAir.com: The California-based company which offers flights on all major airlines and to all major airports worldwide. CheapAir became the first travel agency world-wide to accept Bitcoin as an alternative form of payment for flights in 2013.
Destinia.com: Spanish travel agency accepts BTC and BCH. To see the costs of flights and accommodation in cryptocurrency, just swap local currency for BTC or BCH at the top right angle of the homepage.
ABitSky.com: a travel agency that connects flights from Europe around the world. It specializes in accepting Bitcoin payments only.
Ok, but still is that real to spend cryptocurrency while travelling? A cryptocurrency enthusiast, Jaide Barclay from Australia, made a 12-week journey around 10 countries, documenting her adventures on her vlog. Her goal was to spend cryptocurrency on every point of her way. She knew that there were many businesses accepting cryptocurrencies. But reaching these businesses was where the problem lies — Jaide had to do a lot of research before spending crypto.
By the way, projects like Cyclebit will approach cryptocurrency mass adoption by supplying merchants with POS terminals for crypto payments, so that crypto enthusiasts could experience more comfortable journey.
Blockchain technology for travel agencies
The travel industry contains a long chain of intermediaries, which can cause information lags, delays, and financial losses as a result. The blockchain technology can solve this problem by closing the “gaps” made by different payment systems. Thus, Travelport, a business and consumer travel services provider, announced that it had integrated IBM’s Hyperledger Fabric to guarantee commissions paid to travel agencies. The blockchain was designed in association with IBM, travel management company BCD Travel, and three hotel chains. The system aims to reduce the number of payment disputes by “putting the lifecycle of a booking on the blockchain”. Marwan Batrouni, Vice President of Global Hotel Strategy, BCD Travel, describes the possible situations when the system works out:
— Currently, the management of hotel data is a challenge. The traveler can modify their booking multiple times, leaving room for information to go missing. For example, if a traveler arrives and then extends a hotel stay, that information might not make its way back to us as booking data. But with blockchain technology, we can capture the data from other sources, so there are no gaps. This greatly improves the reconciliation of hotel commissions and ensures our clients are getting accurate bills.
Additionally, blockchain will help close the “gaps” made by different payment systems.
Various services that can make the life of travellers easier.
Sometimes tourists even don’t need to do shopping with cryptocurrency, but simply to exchange the fiat money into digital currency. So, some kinds of companies provide solutions for these situations. For example, at the end of 2018 Schiphol — the international airport serving the Netherlands’ capital city, Amsterdam, launched a trial project — an ATM that allows travelers to exchange their euros for bitcoin or ethereum. It gave travelers an option to convert their remaining euros to the two popular cryptocurrencies when they leave the country.
What are the perspectives?
Industry experts see the great potential of the blockchain technology for improving business processes: develop loyalty programs, reducing transaction costs, helping airlines better track bags and monitor their supply chains and perhaps even easing the lines at immigration checkpoints.
Keeping in mind that the travel industry might have more middlemen than any other sector, Phocuswright, a global travel market research company, pointed in its report that “blockchain technology will likely have a major disruptive impact on the way travel suppliers and intermediaries do business.”
Norm Rose, Senior Technology and Corporate Market Analyst in Phocuswright, claims that as the currency stabilizes, travel companies would be wise to consider using cryptocurrencies — and not just for their potential to reduce transaction costs.
— There is a whole culture that has emerged around cryptocurrency. It’s more about accessing a market. If you’re targeting millennials, it’s probably a good idea.
Even those experts and industry authorities who at first were skeptical about the wide usage of cryptocurrency changed their minds. So, for example, Glenn Fogel, CEO at Booking.com, sees the big potential of cryptocurrency mass adoption:
— I do see the potential for a new form of global currency that is protected and secure. When Bitcoin became well known, many questioned its legitimacy, and while the jury is still out on the future of Bitcoin, I do believe currencies with a blockchain base will continue to surface and may become more widely accepted across the globe, especially outside the U.S., which has a well-accepted credit card payment system.
Other experts believe that the blockchain technology will revolutionize the travel industry. Thus, Trond Vidar Bjorøy, a consultant and advisor to the travel industry and blockchain startups and the head of new product development and implementation for Nordic markets at travel management firm ATPI, names 10 pain points that blockchain can cover. Here is a full list of issues and how blockchain could help to solve them:
1. Overbooking
Blockchain could, in theory, remove the problem of double bookings in the travel industry by preventing double-spending.
2. Fraud
Refunds and chargebacks often occur in the industry, so merchants’ work is connected with a high degree of risk of financial losses. The feature of the blockchain payments is that once a payment has been made, the person can’t reverse it. This will reduce the number of fraudulent cases.
3. Identity and reputation
Decentralization, which goes hand in hand with crypto-economics, will enable billions of people who are disconnected from the global economy, to get access to financial services and connect them with the rest of the world. So, more people will have the opportunity to travel, because reputation-based identity systems will be able to prove their identity. Moreover, as a trusted individual with a reputation guaranteed by the blockchain, travellers could say goodbye to waiting in lines, TSA and obtrusive checking of personal details.
4. Settlement
Blockchain allows for moving money faster. Plus, the removal of intermediaries and their fees, money transfers in real-time, instant settlement, streamlined and continuous auditing — all these will benefit the travel industry.
5. Loyalty
Currently, loyalty programs are valid within one company or alliance. But what about buying tickets with points earned from using services from a competing company? Such mechanics may become real through the blockchain technology.
Other notable issues are traveller profiles, policy and compliance, a duty of care, smart contracts, and removing silos.
As we can see, there is great potential for blockchain and cryptocurrency to improve the travel industry. But even now, travel companies and merchants can evaluate their businesses by integrating the cryptocurrency payment system. Becoming a FoPay merchant you will:
— attract new customers;
— gain interest from foreign travellers;
— reduce transaction costs and won’t lose money on conversion operations;
— reach a comparison with competitors.
FoPay payment system offers solutions for different types of business. Just choose the way that fits your business:
1) API integration — for those who accept payments directly from the website.
Example: https://www.youtube.com/watch?v=rNFam-dtzlk&t=8s
2) Manual invoice (email billing) — for those who don’t have a shopping cart on the website but still need to receive money from clients via the Internet.
Example: https://www.youtube.com/watch?v=pBWh7P5u-T8&t=21s
3) POS Terminal in store — for those who’d like to accept cryptocurrency at point of sale. This solution includes a compact and efficient POS terminal with contactless and QR payment capability.
Example: https://www.youtube.com/watch?v=b46nJDJVB2s
If you are not sure what method suits you best, just fill in the form at http://bit.ly/35D6aNC, and we will get in touch with you offering the best solution.
