Amid a polarisation of views on the practical value of cryptocurrency, TravelKoin is positive it can alleviate persistent travel industry painpoints – think many thousands of dollars on unneeded costs annually, according to Fabian Bartnick, TravelKoin’s head of strategic partnerships.
TravelKoin, which offers payment and loyalty applications for the travel industry, will launch an initial coin offering next month.
A familiar problem for travel companies is the substantial amount of bank fees that come with international transactions.
Bartnik, who is also with revenue management firm Lodgiq, shared that a US$500 service can come with US$20 in bank fees, resulting in US$520 being paid by the hotel and US$480 received by the technology vendor, and that’s not taking into account currency exchange.
For DMCs, which deal with many layers of payment, the siphoning effect is even more severe, explained Sandor Levai, CEO of ICS Travel Group – which last month became an early integration partner of TravelKoin.
Frictional costs also come into play. “(Some banks charge) a flat fee of US$80-100 per transaction, so we have to wait until we (get bulk) so it makes more sense to pay the bank fee than to fly (to another country) to deliver payment,” Levai said.
Levai added that transactions can take up to five days to process, while TravelKoin offers a near instant solution. For him, quicker turnaround could well mean greater business volumes.
And when it comes to certain countries, “sometimes payment doesn’t arrive, or gets blocked”.
Take for example Myanmar, “a politically incorrect country… for a lot of banks”, but in the travel industry represents a big emerging destination, Levai pointed out.
Bartnick said TravelKoin solves such problems by removing the bank intermediary from the equation and having the same currency on both sides, with users charged only a small fee for currency to be mined.
For many travel service providers however, a new currency isn’t a total alternative until the many parts of the supply chain – down to the smaller tours and activities provider – get on board.
But Bartnick said TravelKoin could be an easier sell than one would expect. Regardless of the industry’s track record of technology inertia, savings and convenience are ideas that resonate.
“Every start-up has to get over a hump, but it’s only as big as its limitations of value creation,” he said.
If transacting in the new currency requires a simple click of a button, and results in thousands in savings, “then the value creation is already bigger than the hump”.
Even for providers of tours and activities, who may lack organisational resources, the same applies. “They (may not understand the technology) but they understand savings, convenience and reach. The heavy lifting is already done by the DMCs and all (the activity supplier) has to do is sign up,” he reasoned.
If a future where cryptocurrency payment is the norm is still a remote idea, Levai points to history. “We used to (barter trade). Someone came along and said why don’t I give you a coin in exchange. Suddenly people started having these coins, then credit cards which people also initially didn’t trust. But at some point everyone is using them – because it was the logical next step,” he said.