No one in China would ever think of paying in cash these days. What would be the point? You've got Alipay and We Chat on your smartphone or watch, you just scan the QR code displayed and you're done. Even in many European countries, getting out your wallet is seen as a sign of being pitifully behind the times. In Copenhagen, Rotterdam or London, you pay for your flat white soya macchiato by quickly swiping your credit card over the NFC (near field communication) reader – and you're finished. Bank notes, let alone coins, are far too much hassle!
The latest developments are set to further advance the trend towards digital payments in the hotel sector. One of these is that digitally socialised groups of guests are increasingly wishing to pay using precisely the method that seems most convenient to them. Above all, that includes the growing number of Chinese people who are keen on travelling, and who often use We Chat Pay for mobile payments.
Experts know that this payment app is available only to those living in the People's Republic, as the actual transaction is processed solely using credit cards issued in China. However, western banks have now also discovered business with convenient payment systems and are working flat out to develop new models that can compete with conventional payment methods. Some have already been highly successful. These include alternative payment methods such as iDeal (NL), Alipay (CN), We Pay (US) and Amazon Pay.
Christian Meissner, Director of E-Distribution at Deutsche Hospitality, can only confirm this trend. "New payment solutions are emerging in the age of digitalisation, and this is leading to rapid changes in consumer expectations," he warned his sector at the HSMA eDay 2018 in Berlin. Even today, he said, almost half (49.4%) of consumers terminate the buying process if the online retailer concerned does not offer their preferred payment method.
You could also say that consumers' patience with "inflexible" providers will decline in line with the increase in the number of alternative means of payment, for both point-of-sale payment transactions and online payments. And simply offering payment methods that are "different" or "new" naturally won't be enough. PayPal has become the preferred method of payment for online sales – ahead of invoicing, direct debits and credit cards – because it offers a solution that is extremely convenient to manage compared with others.
In the corporate segment, on the other hand, "consumers" such as Siemens expect virtual credit cards to be accepted, as this solution is the handiest that is currently available on the market. That's because travellers no longer have to pay any money in advance or collect receipts; because they fulfil the requirements for automated end-to-end processes in terms of checking, reporting and invoicing; and because they ensure the hotels receive guaranteed and fast payments.
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Convenience is the new basis for customer loyalty
What did digital coach Steven Van Belleghem say at last year's Hospitality Symposium? Convenience is the new basis for customer loyalty. Van Belleghem said: "Customers don't fall in love with brands any more these days. Customers fall in love with the interfaces of brands." That means a love will last only until another provider comes up with something even more convenient. "That's something," payment expert Christian Meissner says, "that we mustn't ignore!"
Meissner by no means only thinks about convenience for his guests, who come from all over the world, but also the necessary "interfaces". The European Commission has passed the "Payment Service Directive 2", thereby setting in motion a development that could turn the entire world of payment transactions upside down and give rise to new payment services as well as new desires.
In particular, PSD 2 has been adopted in order to provide appropriate support for fintechs and innovative payment procedures – including payments by smartphone. In reality, however, this means nothing less than that every bank will in future be obliged to create interfaces that payment service providers can use "without discrimination" – i.e without having to use an intermediary – to access their customers' data and set up a SEPA payment, for example.
Put differently, if banks lose not only their sovereignty over their data and infrastructure, but also their ability to continue tying customers exclusively to themselves, the result will be a race to find the most convenient payment solution on the planet. Interestingly, PSD 2 came into force in January 2018. The fact that very few people have heard of it to date could simply be due to the 18-month waiting period granted by legislators, or it could be because of the complexity of the law's implications.
"You just have to understand it and know what your guest wants"
However, Constantin Rehberg, Chief Digital Officer at the economy hotel chain Prizeotel, says there's no reason to panic. Service providers like Wirecard, which has subsidiaries on every continent, are now making it relatively easy even for individual hotels to try out different payment methods. "That won't involve massive costs," Rehberg says. "Setting up an interface with PayPal or Amazon, for example, won't cost more than two to five man-days; with other providers and other payment methods it's even faster and it's often just a mouse click." He adds: "You just have to understand it and know what your guest wants"
Prizeotels expect guests to want to be able to pay via Amazon, Google and Apple Pay in future, and have offered these services from the beginning. They are certainly not the first to do this; others in the hotel industry have also realised that their guests would like to decide for themselves how to settle their bill.
Payment option as part of the sales strategy
Online experts like Christian Meissner, who is also on the board of the Hotel Electronic Distribution Network Association (HEDNA), a global organisation for digital distribution, don't think it is enough simply to accept different payment solutions. Meissner believes that every hotel company must integrate the new variety of payment methods into its sales strategy. "For certain sales channels or (defined) target groups, I will have to choose certain payment methods in future," he says.
That means that each hotel will in future have to base its decision for or against a specific payment option on which channels its guests use, which countries they come from, which country-specific features they are used to, etc. The payment options available would thus become a fixed part of any sales strategy, Meissner says. "When chosen carefully, payment methods can provide additional support in attracting specific groups of guests, and thus become an asset in the competition for guests."