Matthew Chapman is chief technical officer at travel tech provider Vibe
With Starbucks and Microsoft now accepting Bitcoin as a payment, should the travel industry be doing the same?
Travel, in fact, has already taken steps in this area, with Expedia having over 700,000 hotels available for booking via Bitcoin (and 30 other cryptocurrencies!) and Air Baltic starting the trend in aviation back in 2014.
Indeed, Pavilion Hotels and Resorts 每 an APAC坼headquartered chain with hotels around the world 每 started accepting payments in 40 different cryptocurrencies in July this year.
How does it work? Firstly, it is important to remember that Bitcoin is just one of many cryptocurrencies, albeit the best known and most widely used by far. Other you might have heard lots of talk about are Ether and Doge, but there are thousands in existence.
Secondly, you need to understand that in almost all cases companies accepting cryptocurrencies are using some kind of intermediary platform to handle the payment 每 Coinbase or BitPay, for example.
In other words, they＊re adding crypto as they might add any other non坼major currency they don＊t currently accept or operate in, just like they might add South Korean Won or Singapore Dollars.
And in many cases they＊re immediately converting that cryptocurrency into 'fiat currency' 每 the normal, real world, non坼digital money we all know and love.
They do this to avoid any exchange rate risks, which in cryptocurrencies can be significant, but also because ultimately they＊re unlikely to be able to pay staff or suppliers in crypto.
This brings us to an important point: if this is so simple and could increase supplier revenues, why aren＊t more businesses accepting crypto payments? Well like everything in life, there are direct and indirect costs involved. There＊s also quite a few operational headaches. And did anyone mention the risks?
Keep in mind that all these payment platforms charge suppliers a small fee. Also keep in mind that suppliers would need to have their prices continually fluctuating to keep up with the latest exchange rate valuation.
There are also tax implications in some jurisdictions, making extra坼accounting record necessary. There are also some security and fraud concerns, with some high坼profile theft having occurred. And refunds are a nightmare. Oh, and in China cryptocurrencies are more or less banned.
So unless suppliers have an instant ＆convert to fiat＊ option operating in the background, they're essentially just becoming a currency speculator. That means exposing yourself to the risk of huge losses with just one Tweet from Elon Musk or a government ban.
Plus, with thousands of cryptocurrencies out there, suppliers would have to continually review which ones they want to accept and which not. That all takes time and money and comes with considerable risks.
All of that said, suppliers should be asking themselves ※would introducing this payment method increase revenues enough to make the extra costs and risks worthwhile?§.
If the answer to that is yes then they should, of course, be exploring this urgently.?And as mentioned, there are ways they can reduce the risk (at a cost). And why not keep compliance busy 每 it＊s what they are there for, right?
The main thing for suppliers to consider, however, is whether there is appetite from business travellers and their organisations for paying via crypto. And one thing is for sure, we're not seeing much of that yet.
Business travellers will 每 or at least should 每 pay via their employer's chosen payment method and, Elon Musk aside, few companies are yet prepared to accept the risks associated with cryptocurrencies in their current guise.?