ChinaTravelNews, Ritesh Gupta – The online travel sector in China stands out for a broad spectrum of payment acceptance, with digital wallets featuring prominently in the list of alternative form of payments.
For instance, Marriott International is currently working on plans to roll-out Alipay payment option in China, as more and more travel brands try to curtail checkout friction and boost sales conversion by adding digital wallets.
Even Chinese companies are strengthening their payment strategy. During one of our recent interactions with Ctrip, it emerged that the team was very close to allowing foreign travellers to use their Chinese debit cards to make purchases on its platform. This would mean elimination of service fees that comes with using foreign credit cards to make international purchases, and facilitates convenient travel for foreigners residing in China.
Last month Qunar chose CyberSource’s global payment gateway services to process international online and mobile payments from various card types and from multiple card brands and issuers.
Marriott, which recently tied up with Ant Financial Services Group for its new offering, also intends to introduce Alipay to properties in key markets outside Asia by the end the next year.
“We target to release acceptance of Alipay at the first 10 hotels and Guangzhou reservation centre, and via Marriott.com.cn around mid-October. It will then be activated on Marriott International English website (www.marriott.com) and via Chinese mobile app will be introduced at a later stage,” Craig S. Smith, president and managing director of Marriott International, Asia Pacific told ChinaTravelNews.com.
Powerful blend of China and mobile
Smith says there are two key trends in the hospitality industry nowadays: mobile and China.
“For Marriott International, we see 50% of our digital visits are done from a mobile device. In terms of sales, our mobile sales increased 35% year-on-year. Customers nowadays prefer to book their travel on their smartphones. Smartphone is the fastest growing segment in e-commerce for Marriott International,” mentioned Smith.
He further added: “The second consideration is China. It is expected that the number of outbound Chinese travellers will reach 200 million people a year by 2020. Alipay is one of the most trusted and popular mobile payment options with Chinese travellers, who now lead the world in outbound tourists and purchasing power. As of June 2015, Alipay has 80% market share in China, and according to our consumer insights, the use of Alipay as a payment option is one of the top “needs” when Chinese travel to overseas, especially for the Next Generation (Gen Y) traveller.”
Smith said the roll out of Alipay at the first 10 Marriott International hotels in Asia has been smooth. At select Marriott International hotels, the front desk will install dedicated QR code/ barcode scanners that are connected to the Alipay system. “To prepare, the 10 selected POC (pilot or proof of concept) hotels have undergone weeks of testing to ensure that the technology is stable and will compliment to the superior service that we endeavor to provide our guests,” shared Smith.
“In addition, we have trained our reservations and operations staff to support this implementation of this technology,” he said.
The hotel company rolled out the Alipay service called Spotpay, which is not the escrow payment. Transactions conducted using Alipay payment method will go directly to Marriott International hotels, not a third-party. Smith said the importance of mobile payment methods such as Alipay is that they are enabling e-commerce to become mobile and convenient for customers. “By adopting Alipay at Marriott International hotels, we are making it easier for our hotel guests to pay for their hotel stays, food and beverage purchases as well as for meeting and event bookings,” he said.
How to accept Alipay?
There are two ways businesses can start accepting Alipay payment method - direct integration with Alipay or though one of the third parties such as a payment gateway provider. Both of these ways have their own pros and cons, says Singapore-based Shreyansh Durgesh, Director of Sales and Business Development, Asia Pacific, Bitnet Technologies. “For example a direct integration may be cheaper but hard to manage due to limited support coverage by Alipay at international locations. On the other hand, working with third parties simplifies the integration process through a single connection, streamlining ongoing reporting etc but it comes mostly at a higher cost. Choosing either of the methods depends on business’ requirements and priorities.”
Durgesh also added that there are important operational considerations that need to be addressed before accepting a new form of payment. Aspects like reporting and reconciliation, settlement process, refund management, ongoing support levels from the provider and rollout of future functionalities are some of the key things to consider. “However the fundamental question that needs to addressed is clarity on the business driver for accepting a new payment method - a clear definition of business strategic goals supported by such payment method is important,” asserted Durgesh.
According to Nagarajan Rao, SVP Global Head Business & Product, Transpay, the resources needed to integrate a PSP (payment service provider) like Alipay can be extensive but are required to complete transactions in the Chinese market. “For a large, international travel brand like Marriott, operating in China requires a separate integration cycle and payment acceptance service level than would typically be needed for other regions and markets. This means that the travel brand would need to dedicate resources and staff to processing and acceptance for the Chinese renminbi,” says Rao.
He adds that other PSPs like Stripe and Braintree provide for a more seamless integration on the backend, however because of regulations in China and Alipay’s market size, it is easier for brands with interests in China to work directly with the payment platform. “Completing travel transactions in their local currency is a top interest for Chinese travelers and Yuan payments increased by 20.3 percent in value in December 2014 compared to a year earlier, so it make sense to give travelers that option,” said Rao.
Integrated payment solution
Global brands are not just looking at China, but they are also looking at other markets in Asia as they embrace new payment options. And also trying to understand how the blend of digital and offline works in order to complete a transaction. Also, it should be noted that various non-credit card payment options have different rule sets, e.g. maximum payment limit cap; refund could be offered online but only possible offline in some payment options etc.
Alternative payment options like digital wallets are increasingly playing a significant role to serve the local market needs.
Travel companies are opting for an integrated payment solution riding on a payment network in Asia, they are looking at covering most of the local payment acquirers and payment brands in this region. This way a hotel or an airline or any merchant has the option to integrate via one platform rather than dealing with each acquirer separately.
While working on a payment strategy, key considerations are:
· Design the integrated payment flow across payment options across channels and languages;
· Implement integrated payment transaction and settlement reporting;
· Implement multi-currency processing and conversion;
· Implement necessary payment controls according to the difference of processing by payment types (e.g. refund, void, capture);
· Implement fraud monitoring and prevention across payment options;
· On-going support and maintenance of these payment interfaces of each form of payments according to upgrades over time.