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Airlines and travel enterprises continue to spend billions of dollars to gather payments while losing over a billion a year to credit card fraud
Airlines and travel enterprises continue to spend billions of dollars to gather payments while losing over a billion a year to credit card fraud. CoinTelegraph talked to blockchain modernizers about the application of a “frictionless” loyalty ecosystem.
The key payment and fraud-related topics will also be discussed at the 10th annual Airline & Travel Payments Summit (ATPS), co-hosted with UATP. This event will take place in Barcelona on April 26-27 and will offer three conference tracks:
Gregory Simon, CEO and co-founder at Ribbit.me, identifies four main sectors that Blockchain could be applied in: money, passports, reservations and insurance.
Money: Blockchain travel application is about money. Bitcoin payment from a smartphone to a foreign currency exchange is an expensive procedure. If it is not possible to pay with Bitcoin, another cryptocurrency application is more beneficial through worldwide Bitcoin ATMs or converting fiat money from Bitcoin to local currency through a crypto exchange. Another crypto application is Loyalty Network at Ribbit.
Passports: On the blockchain we could be storing important documents such as passports, visas, permits, identification cards, and driving licenses.
Reservations: Travel DAC (distributed autonomous corporation) like Ethereum blockchain shows the way. By this, a traveler could be more efficiently organized.
Insurance: Travel insurance through decentralized peer-to-peer are viable alternatives, as it is cheaper and offers more transparency.
Christopher Franko, Blockchain scientist at Ribbit.me, notes that bitcoin is a borderless technology. That’s what makes it so powerful for the travel industry.
Franko explains to CoinTelegraph:
“I can have one dollar or one million dollars in my pocket and travel to any other country in the world with very little risk of it being extorted from me. Try that with a suitcase of $100 bills and you will probably be the proud owner of an empty suitcase pretty swiftly. Whether Expedia takes it or not is irrelevant, it's whether you can take it with you and trade it for goods and services or not.”
Whether we need a special blockchain back up by a new cryptocurrency, Franko says that he doesn’t see why it would be needed.
He tells CoinTelegraph:
“If they feel they can do it better than any other blockchain that exists then go for it! I mean, a blockchain is essentially a decentralized, fault tolerant, incorruptible, transparent database and if you feel those qualities are what you need for your project, then by all means, make one.”
Kalpesh Patel, Owner of Green Country Inn and BookwithBit.com, explains that there is a need for an online travel agency. His website, bookwithbit.com, only accepts Bitcoin while Expedia does offer it as a payment method, with limited success.
Patel explains to CoinTelegraph:
“The experience people have had from Expedia by booking with Bitcoin has been very negative. Also there are no booking promotions for using Bitconi. For example, while many sites offer special rates or other benefits, Expedia offers nothing. There are also no offers to hotels or their guests so why would they use Bitcoin to book a hotel when they know Bitcoin will be worth more in future?”
There are a lot of problems that the Bitcoin community should solve. Patel underlines that it has to create fast working services for Bitcoin. For example, if a hotel receives Bitcoin, it should be able to buy something or pay bills with Bitcoin.
Patel continues that when someone pays using Bitcoin, a merchant converts Bitcoins into dollars. As the value of Bitcoin goes up and down, it is necessary to create an economy solely for Bitcoin. It therefore needs funding from VC or support from the Bitcoin community to do so.
Lee Gibson Grant, Developer of Drachmae Travel Club at bitcointalk.org, explains that it is necessary to take into consideration why Bitcoin or the Blockchain has not disrupted the travel sector even with that particular sector being very slow to innovate.
Grant believes that travellers and businesses alike need to see more benefits other than transparency and cheaper methods of payment.
He says to CoinTelegraph:
“Currently, there is no real benefit for a traveler to go and buy bitcoin. Also many people in the cryptosphere have an illusion that Bitcoin is widespread and readily available. If the traveler does not have access to the Internet or online banking and there is no Bitcoin ATM in the location, they are left with the predicament of Bitcoin holding its value but with no means of exchanging it into an local acceptable currency.”
According to Grant, currently Bitcoin doesn't offer enough incentives to be adopted or to have market demand. Bitcoin therefore fails to service the 4 horizontals required by the travelers and travel sector.
He continues by saying:
“The travel sector already has established digital currencies that come in the form of loyalty programs so if we look at Airmiles via airlines which is easy to obtain as follows: You are rewarded Air miles when you purchase at: Supermarkets, Fuel stations, Flights, Credit Cards.”
Grant points out that it is necessary to look at consumer behavior as this also plays the largest role. If a consumer is able to get Air Miles when using their credit card, goes to the fuel station, purchases fuel, he or she receives a double reward. Then he or she goes shopping, pays with the card and gets a double reward. It fits automatically into the consumer's daily life. In Holland, which has a population of 16 million people, there are 3.8 million people collecting Air Miles.
Why do Air Miles play such a big role in the travel industry such that Bitcoin cannot compete with it? According to Grant, it’s estimated that 14 trillion Air Miles (60% of Air Miles issued) have never been redeemed. When we consider that travellers can buy Avios Air Miles for 0.031£ (0.045$), that then creates a market depth and market cap of over 600 Billion USD. You can buy and sell Air Miles, even exchange them. Everything Bitcoin can do is supported and promoted by large companies with direct access to end consumers.
Grant explains to CoinTelegraph:
“Even with large companies and benefits alongside widespread adoption Airmiles are heavily criticized over 70% of frequent flyers complain they want to use Air miles on something different than flights and 60% of people do not redeem the Air Miles as they feel they need to collect too many to see any real benefits.”
While Bitcoin and Blockchain technology potentially have a large role in the industry, it has still failed to even make an entry and has been criticized by adopting companies.
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