Author: admin

Source: triplease.com

On September 14th 2019, radical new regulation will shake up online card transactions, yet hotels are not prepared for the fundamental changes in store – and less than 5% of merchants are even aware that the legislation exists.

Strong Customer Authentication (SCA) is a requirement of the European Union’s sprawling Revised Directive on Payment Services (commonly known as PSD2), and will demand that issuers receive two separate types of authentication to approve the vast majority of online (‘card not present’) transactions.

When SCA comes into effect on September 14th, ‘card not present’ transactions will require two of the following three types of authentication: Knowledge (something you know – for example, a password); Possession (something you have – a credit card or smartphone); and Inherence (something you are – biometrics such as Touch ID or even voice recognition). A credit card and CVV number are no longer enough. A number of exemptions do apply, including contactless payments, commercial transactions, recurring charges and more. Low-value transactions can also be exempt but, according to research from 3C Payment, only if they are below an Exemption Threshold Value that is dependent on the reference fraud rate of the bank.

For many industries with a direct merchant-to-customer relationship, this new regulation will act as a fantastic opportunity for businesses to increase their security and provide consumers with confidence in their online transactions. But e-commerce in the hotel industry is made up of a complex web of distribution and payment channels and the ‘merchant’, as defined by this new regulation, isn’t always clear-cut. Hoteliers face a rush to reach compliance by the September deadline. Collaboration between all parts of the distribution chain is needed, as Paul Rodgers, Chairman of pan-European payments organization Vendorcom, predicts that hotels risk up to 30% of payment authorization requests being declined when SCA comes into effect if no action is taken.

The confusion around how authorization will be communicated between OTAs and hotels – and the ensuing risk of revenue and reputation damage – could indirectly lead to hotels shifting to a merchant OTA model when it may not make sense for their organization, impacting the already delicate dynamic between hotels and OTAs.

A direct impact on the direct channel

Before getting into possible third-party implications, though, hotels need to know how the new regulation affects their direct channel. Although telephone banking and Mail Order Telephone Order (MOTO) transactions are exempt, all online payments will require SCA compliance, essentially requiring a fundamental change (and potentially costly investment) to a hotel’s website to be able to capture the required authentication. But the management of hotel websites is often a complex process that the hotel may not have full control over, with multiple payments flows, franchises, and booking engines that need to be accounted for. Along with this, the inevitable increase of declined card transactions will require staff to answer questions, chase down unpaid bills and deal with the impacted customer experience that any added friction will create.

Despite all this, there are steps that hotels can take to start preparing for the September deadline. Facilitating alternative payment methods such as bank transfers will be key. Systems like Apple Pay (which requires Touch or FaceID to process the payment) provide both Possession and Inherence authentication in the form of a guest’s smartphone and biometric data respectively. Authentication at check-in is also needed, potentially through an app or even Chip & Pin if payment was not taken upfront. However, adding the 3D Secure (3DS1) protocol to your direct payment collections process is the easiest way to ensure compliance with SCA. Branded as ‘Verified by Visa’ and ‘SecureCode’ in certain cases, 3DS1 is a way for merchants to take secure payment that is not affected by chargebacks – and crucially collects a second authentication factor through a static password that is entered on the bank’s separate redirect page.

With greater flexibility as to when authentication is required, 3D Secure 2 could be an effective solution to the challenges posed by SCA (Source: Stripe)Thankfully, a new version called 3D Secure 2 (3DS2) was released late last year that is more seamless and has more flexibility, and certain payment gateways such as Stripe are already making moves to ensure it’s implemented well in advance of SCA’s implementation date. Despite this, it’s up to hotels to ensure that all relevant internal and external partners in their direct channel are using 3DS1 or 3DS2, and to discuss with gateways and acquirers on how to flag transactions and where exemptions may come into place. This could even be a long-term advantage for hotels – as Mirai point out, parity in payment-collection security and quality could replace rate parity as a core distinguishing factor for hotels.

Are OTAs ready for SCA?

With so many intermediaries involved in the distribution process, though, compliance starts getting complicated. Most hotels deal with a number of third-party merchants as part of their distribution process, including a number of global OTAs who may not view complying with European regulation as an immediate priority to how they operate. The agency model, where card details are passed on by an OTA to later be charged by the hotel, faces disruption with the introduction of SCA. This could even potentially instigate a wider move to the merchant model and the fees and dependency that comes with it.

The first major challenge is that, unless payment is taken face-to-face at check-in or check-out, the OTA will have to obtain authentication from the guest at the point of booking, requiring them to have the likes of 3DS1 or 3DS2 in place to do so. Secondly, this authentication will have to be passed on and match the later authorization request from the hotel, which is something that issuers may find difficult to do (although Mastercard have already confirmed a degree of leniency with this process). An added complication is that any authentication only lasts for 90 days. Across the thousands of hotels we work with, 17% of bookings made in the last six months had a lead time of over 90 days. Hoteliers may have to acquire authentication multiple times for a significant minority of their bookings, adding considerable friction to the pre-stay process.

Whether direct or through a third party, the hotel payment journey is incredibly complex, and involves a number of actors (Source: 3C Payment)The good news is that many of the major OTAs are already in the process of ensuring SCA compliance – many, but not all. Also, even if they are not the company taking the funds, an OTA will need to authenticate at the point of booking, and it’s uncertain whether they will be comfortable with taking a test payment to do so. This added friction to the checkout process, alongside the fact that each of the over 6000 European banks may have their own interpretation of SCA rules, means the impact to the customer experience may well be inconsistent and frustrating – potentially causing damage to your brand image and abandonment rates.

Too much, too soon?

Despite the good intentions behind it, SCA regulation was not designed with the complexities of online travel in mind. The need for greater authentication protocols is welcome, and hoteliers can start to take positive actions and reach out to appropriate parties, but the regulation and the timescale to implement it does not account for such a complex distribution chain. Mirai CEO Pablo Delgado states that not only are “hotels are not at all ready and will not be for a long time”, but also that “the industry will not be ready either”. Hotels will surely feel aggrieved at the fact that even if OTAs, travel agents, banks, gateways and card issuers are collectively unprepared, it will be hoteliers that feel the pain of unhappy guests.

With three months to go, and still little clarification, visibility or guidance from the responsible authorities as to how the regulations can be easily implemented, the September deadline is unrealistic, if not entirely impossible to achieve for many hotels. Will the authorities relax their restrictions, or work with hotels during a transition period, or does this regulation spell the end for the agency model as we know it? With only three months until SCA comes into force, we’re still no closer to knowing.

Source: phocuswire.com

Every day, consumers are bombarded with travel images, videos and other content across channels that highlight new amenities or showcase the perfect family vacation spot or a romantic weekend away.

It’s clear more travel brands are leveraging digital strategies to reach their target markets, but there’s a catch: only 18 percent of executives at travel and hospitality brands believe their company is a digitally mature organization.

Additionally, a recent report revealed a surprising pain point: one in two travel marketers listed delivering personalized ads and offers in real time as their top challenge.

 

As digital continues to mature, there is a shift occurring among marketers: travel marketing and digital travel distribution strategies are converging, and it’s having a major impact on the industry.

To be successful in this era of convergence, travel providers must think more strategically, not just about inventory, but about how they’re selling entire experiences. With convergence, new revenue streams are up for grabs and these extend well beyond the traditional traveling ecosystem.

Now, staying competitive means using data to actually understand potential customers and where they are on the path to purchase, all so they can make more strategic decisions to earn customer loyalty.

As convergence continues, travel marketers with the best multichannel strategies will win.

Here’s why.

Blurred lines

Travelers all have needs, but those needs vary dramatically depending on the moment.

One week, a traveler may be flying for business, and the next that very same traveler may be on a summer vacation with family. They’re not one or the other—they’re both, just at different times.

As these lines blur, habits are shifting, and travelers are finding unconventional ways to meet their in-the-moment needs.

For example, 30% of non-guests have used a hotel’s Wi-Fi, while a third of travelers have eaten in a hotel restaurant when they aren’t staying on the property. Why does this matter?

Because travelers are increasingly agnostic about who meets their needs, and that business is there for the taking.

For marketers, this presents a golden opportunity, but only if they take a holistic approach.

Unlike in the past when people were using phone calls, travel magazines, and traditional travel agents to research, today’s complicated consumer is bouncing between numerous touchpoints in a digital ecosystem.

They’re sending out travel intent signals and leaving a trail of data behind them.

Each signal is critical for personalization strategies, but become even more valuable when viewed in combination with each other.

It’s no longer about aggregates or averages, every traveler is unique and marketers must be flexible enough to look at each traveler’s ever-changing needs and act quickly to meet them.

Smarter, faster, nimbler

If travel brands want to act quickly, they must improve their understanding of what customers want and need at any given moment. And to get there they must be “always on” across every channel.

It’s one thing to personalize marketing to a leisure guest by using broad stroke segmentation, but when brands get on a one-to-one level with the individual customer, they can understand their constantly changing needs.

To get there, they must understand each customer on a trip by trip basis—and combine the person with the occasion to serve up relevant offers.

Since modern travelers are always on, brands must be, too, because always on means valuable data.

The challenge is, unlike retail giants like Amazon, a single travel provider will rarely see the customer’s full shopping and buying habits.

At most, they get a sliver of information, creating blind spots in the customer journey. While most travel brands focus their efforts on the activity of a very small group of loyal customers, the vast majority of people who pass through their doors are brand new customers, revealing a gaping hole in marketing strategies.

Paving the path with data

In an “always on” world, it’s important for travel marketers to continually cultivate relationships with recurring customers while capturing the loyalty of brand new buyers. And that starts with defining what data to capture and how to store it in a usable, analyzable way.

However, first-party data is still only a small sliver in the larger travel ecosystem. When first-party data is combined with third-party partner data, brands can begin to build profiles of target customers.

From there, they can use that data to understand the customer journey.

The first step is using data to establish intent. Consumers may be dreaming or researching – or they could buy at any point. By looking at each trip as a mini-campaign, marketers can focus on that whole journey and the points along the way, and then engage them at the moment.

Once the intent is established, marketers must take what they’ve learned about each customer and put the right messages in front of the right people at the right time.

It’s a combination of taking one-to-one marketing, making sure it’s “always on,” then testing, measuring, learning and adjusting.

This dynamic approach is a shift from traditional methods that are often seasonal in nature.

Smartphones, tablets and other technology give consumers the tools they need to go beyond seasonal and be “always on.”

To be successful in a digital world, travel marketers must continually change messaging to get in front of individual travelers at just the right time, but be flexible with those messages, channels, and timing.

The goal at the heart of marketing is to look for new ways to understand customers to better meet their wants and needs. As convergence in the travel industry continues, marketers have the opportunity to digitally reach and engage audiences on an individual level.

It’s a race to see which travel brands can do it best, and those that do will win the ultimate prize: customer acquisition and loyalty.

Source: revinate.com

TripTease recently asked industry experts, including Revinate’s own Anisha Yadav, how hoteliers can increase direct bookings. The answers were wide-ranging and enlightening. We pulled together a few highlights:

Build an OTA Winback Campaign

“Take a look at all of the guests that have stayed at your hotel in the last 30 days who booked with an OTA alias email address such as Booking.com or Expedia. Send out a win-back campaign to them. These email addresses are only valid for 30 days after the guest’s stay, so capturing them within that window is key…and can result in those guests sharing their real information with you, so you can later market to them.”

Build on what worked last year

“Take the time to analyze last year’s most successful campaigns for the same quarter and double down on what worked well. Look at your upcoming ‘need dates’ and ‘high demand dates’, to help narrow your research and adjust your upcoming marketing accordingly.”

Create a marketing calendar for the year

Plan your email marketing strategy for the year ahead of time. In your marketing calendar, you want to include planned promotions, holidays, and upcoming citywides and convention dates. Make sure to give yourself deadlines on when to have promotions ready, you might need to have involvement from other teams so having clear follow-up dates for yourself will help the team effort. This can pay dividends throughout the year when you’re a step ahead of demand and easily able to pivot to meet any changing situations. To help hoteliers, we’ve put together an email marketing planner.