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Mike Carlo of WEX Travel Weighs in on Travel Industry Trends

Posted November 11, 2015


Technology innovations and consumer preferences go hand-in-hand, and competitive players in the travel industry need to stay on top of the trends. As the head of Travel Solutions at WEX, Mike Carlo is immersed in the marketplace, and his years of experience and a knack for “catching the buzz” lend valuable insights into the industry innovations that everyone’s talking about. He sat down in an interview to share his thoughts about what’s hot today—and what the travel payments professionals can look forward to in the years ahead.

VIRTUAL CARDS: Today, procurement professionals can choose among different supplier payment methods, including virtual cards. Do you see a future in business travelers “carrying” virtual cards?

I think the primary use case for virtual cards in travel will remain in the B2B payments arena. That’s because virtual payments tend to work “behind the scenes” rather than be part of the individual traveler’s payment repertoire. Most companies have used virtual card processing for B2B transactions, especially where there’s a need for confirmation—and we’re seeing plenty of enhancements for sharing this information. The controls and data capabilities inherent in virtual payments will help them pick up speed in the years ahead.

The payment needs of business travelers, on the other hand, will more likely be solved by various travel industry apps that store payment information. “Carrying a virtual card” is a challenging concept to grasp, so I see this will be slow adoption -but apps are already in place to replace plastic. I’m anticipating that payments will follow Starbucks’ example: they’ve moved a physical, proprietary card into an app customers can use to automatically or manually reload—and now, they’ve taken it a step further, allowing customers to place an order and make a payment remotely for in-store pickup. They’ve made the customer process as simple as possible for this very routine purchase.

SHARING ECONOMY: How do you think the “sharing economy” in the travel industry will impact corporate payments?

Today’s sharing economy services are definitely increasing opportunities for new forms of B2B payments, and I think we’ll see a drive toward the virtual payments solution. It’s amazing that companies like Uber have already supplanted a fair amount of ground transportation costs for companies—in some markets, the use of ride-sharing is on par with taxis and car rentals. Large companies like Google are actually encouraging employees to stay at Airbnb properties.

As these new industry suppliers pick up corporate customers, they’ll need flexible and scalable ways to receive payments. Traditional forms of corporate payments tend to be more expensive for companies like Uber to process, so they’ll be open to using alternatives to reduce costs. This is powerful encouragement for other types of corporate payment methods, like virtual cards, that are less expensive. Plus, there’s absolutely an opportunity for corporate travel planners to arrange for discounts as part of their payment contracts. Why wouldn’t Uber or Airbnb offer major corporate clients a discount for using their services – hotels and car-rental companies already do!

MOBILE PAYMENTS: Do you foresee mobile and wearable technology becoming the norm for traveler payments?

I’ve been a little bit outspoken on this issue for quite some time. It’s incredibly important to define mobile with regard to payments—and the airline and hotel industries in particular have had trouble with it. Aside from a few examples of mobile micropayments used in developing economies, most “mobile payments” are simply the result of existing payment mechanisms accessed through a mobile platform.

That definition helps explain why the whole notion of mobile payments has been “hyped,” or at least overinflated. The mobile folks did a great job of demonstrating growth of mobile - ever since the introduction of iPads. Payment transactions made from these devices were lumped in with those from phone-based mobile apps, making it appear that there was far greater growth than a like-for-like comparison may have shown.

With regard to wearable technologies, the travel industry will get some ancillary revenues from consumer use of mobile payments and wearables, but probably not so much from ticketing. Wearable subway cards are an existing form of mobile transport payment, but in the broader travel market, transactions are much less frequent. In the future, I think that there will be some apps that make it easier for travelers to make payments on the go, but these technologies are really going to be for regularly recurring transactions like buying a bottle of water at the gym to buying a cup of coffee.

SOCIAL TECH: How will social technology change the way business travelers make decisions and communicate?

Social media is incredibly valuable for helping travelers make in-location decisions, and there are some apps that really enhance the business travel experience. If you’re in a new city for meeting and don’t know where to go, some of the social media apps will tell you who among your connections went to which restaurants—and even provide reviews. Some airlines have done a very nice job of using social media to resolve passenger situations. People will often get a faster service response from tweeting a bad experience than using any other form of communication.

Here’s a personal example: when I was recently in London, I slipped (while sober) on a wet sidewalk, went to the ER and got crutches. When I posted this on social media, I found out a couple of my friends were in London so we met for dinner. It really enhanced my travel experience. We simply interact differently than we did 5 to 10 years ago—and these previously random occurrences aren’t that rare any more. We still have so much more we can do. , I do think there’s potential that hasn’t been tapped yet, like apps for use at industry conferences where you can effectively stalk your customers and prospects.

BIG DATA: What are the biggest opportunities for Big Data in travel? How can companies harness data for insights into payments?

The most innovative use of data I see for organizations is to incorporate payment data to up-sell and cross-sell to travelers—because there’s a difference between how to approach a person traveling for leisure versus business. For leisure travelers especially, data can be used to create a custom experience and increase sales accordingly. A hotel might want to encourage a vacationer to visit their spa or book a ground excursion through their concierge service, but they’ll offer a business guest a free in-room movie—because no one’s corporate travel policy allows for an in-room movie! Likewise, an airline might want to offer upgraded seating to a business traveler, but skip the pitch on travel insurance because their employer already covers them.

The challenge is how do you know the purpose of the trip. Business travelers also travel in their personal life so it can be hard to identify the purpose of someone’s trip. Here’s where payment data comes into play. A customer booking through PayPal is extremely likely to be a leisure traveler. But when a corporate VISA is identified at the time of booking, you’re looking at someone on a business trip. So a travel company can take the booking payment method as the indicator of the reason for the trip—and use it to upsell while improving the customer experience.  All of the information is available – it’s just a question of looking at it!


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