Payment Methods for Incoming Tour Operators in Sub-Saharan Africa Making Payment Collections Convenient for Incoming Tour Operators in Sub-Saharan Africa Introduction: Tourism in Sub-Saharan Africa The Tourism industry in Sub-Saharan Africa directly generated approximately USD 36.6 billion in 2013 with a forecast 4.7% increase expected for 2014. This is according to the World Travel and Tourism Council s Travel and Tourism Economic Impact 2014 Sub-Saharan Africa 1 report. They also predict that there will be a 5.1% rise per annum from 2014 2024, where travel and tourism will generate USD 63 billion for Sub-Saharan Africa in 2024. The tourism industry therefore currently directly accounts for 2.7 % of the GDP in Sub-Saharan Africa and can indirectly contribute as much as 6.9%, making it an extremely important industry to the region. Looking more broadly at Africa in general there was a 5% increase in tourist arrivals in 2013 compared to 2012 2. There were 65.1 million international visitors to Africa in 2013, with South Africa and Zimbabwe as the leading destinations in Sub-Saharan Africa. The World Tourism Organisation has projected that Africa s international tourist arrivals will increase to 134 million in 2030, a 106% increase from the 2013 level of 65 million arrivals 2. This rise will most likely be due to the increased influx of visitors from new economies in Asia and Central and Eastern Europe. Source: United Nations World Tourism Organization 1 Travel and Tourism Economic Impact 2014 Sub-Saharan Africa - World Travel and Tourism Council 2 Africa Tourism Monitor Volume 2, Issue 1, November 2014 - African Development Bank Group iveri Payment Technology 2015 Page 1 of 6
Snapshot: Kenya Tourism is a particularly important sector in Kenya as it contributes 12% of the country s GDP and accounts for 9% of total employment in the country. 3 It has recently faced challenges due to security issues which lead to an 18% drop in tourist arrivals in 2013 but the Kenyan Government has implemented new measures to support and ensure the viability of the sector. They have provided many economic incentives and infrastructure improvements to facilitate and encourage investment in the tourism sector. Highlights in Kenya s Tourism Sector for 2014 Kenya has attracted several international hotel chains such as Kempinski Villa Rosa, Rezidor Hotel, and Best Western. Many opportunities exist to develop tented camps, campsites, lodges, and ecolodges. Kenya s Jomo Kenyatta International Airport (JKIA) is currently undergoing expansion and modernization to position Kenya as an economic hub for East Africa. In September 2014, Kenya won top prizes at the World Travel Awards (WTA). Diani Beach was voted Africa s top beach resort. Kenya s Maasai Mara National Reserve was voted Africa s leading National Park and the 8th Wonder of the World for its spectacular annual wildebeest migration. The national tourism marketing agency, the Kenya Tourism Board (KTB), was voted the Best Tourism Board in Africa for the third time in a row. 3 Africa Tourism Monitor Volume 2, Issue 1, November 2014 - African Development Bank Group iveri Payment Technology 2015 Page 2 of 6
Snapshot: Uganda Uganda is an up-and-coming presence in Africa s tourism sector. Known as the Pearl of Africa Uganda offers a wide variety of attractions, with a number of natural and cultural assets and ecotourism options and a strong focus on community, rural and adventure tourism. Uganda Tourism Fact Sheet 2013 4 Total Arrivals 1,206,000 GDP Direct Contribution 3.3% GDP Total Contribution 7.9% Employment Direct Contribution 2.8% Employment Total Contribution 6.9% Some of the notable attractions in Uganda include: Uganda is home to over 50% of the world s gorilla population. There are 10 national Parks in Uganda. Uganda has over 1,000 different species of birds. Uganda is home to 3 UNESCO World Heritage Sites. Incoming Tour Operators in Africa One of the major tourism industries across Africa is that of inbound tour operators, who create and market travel products and services to customers mainly in long haul markets. They occupy a particular niche in the African tourism market, where they provide visitors traveling to Africa, from overseas, with holistic travel packages which can include accommodation, transport, activities and transfers. Incoming tour operators have a deep knowledge of a particular area or destination, and the service providers therein, that a visitor would not generally have. They are therefore able to make many of the necessary arrangements on the client s behalf. They also eliminate many barriers, such as language differences, for a client traveling to a location which is foreign them. An Incoming Tour Operator will typically use a trusted network of local providers to create tailor made travel experiences for their clients. This network must be very carefully cultivated as every interaction with the client, from any of the service providers, has the potential to positively or negatively affect the vacation experience of the client. An Incoming Tour Operator must therefore ensure that every aspect of the travel experience goes as smoothly as possible for the client. This begins with the client choosing the details of their package, booking their trip, and making payment. 4 Africa Tourism Monitor Volume 2, Issue 1, November 2014 - African Development Bank Group iveri Payment Technology 2015 Page 3 of 6
Payment Considerations for the Tourism Sector Travel and tourism leads the world in online sales and real time, online booking is fast becoming the norm of international travel, with most people using the internet to find and book their travel. It is therefore increasingly important for hotels, tour operators and other tourism service providers to have an effective online presence, in order to optimise bookings. Online platforms must engage guests, and deliver consistent information across a number of connected devices from PC, to mobile, to tablet. Online booking is particularly attractive for travellers as it allows them to easily pick which options they want, asses the location, read peer reviews of different accommodation and activity options and make a booking, quickly and easily from the comfort of their home. It is therefore important for tourism service providers to ensure that they have user-friendly site navigation, booking forms and processes in order to differentiate themselves from their competitors. They also need to ensure that their strategies continue to evolve as both the marketplace and consumer booking behaviour changes. They need to not only optimise prices and offerings, but also keep up with what the customer expects, finds easy, and is comfortable with, when it comes to making online payments. Online payments offer many benefits, both to the consumer and to the business as they enable quick and seamless transactions. Top challenges for ITOs and payment collections There are some unique considerations that Incoming Tour Operators need to resolve when it comes to accepting payments Cross border/international payments- any company providing tourism services must be able to accept payments from all over the world in a way that is cost effective and user friendly both to them and their customers. Currency conversion tourism companies need to be able to deal with the constant minor fluctuations in international exchange rates when accepting payments from all over the world. Secure payments one of the most important aspects of accepting payments online is to ensure that the client s details are safe and secure. It is therefore essential to utilise a payments acceptance system which is PCI compliant. iveri Payment Technology 2015 Page 4 of 6
Negotiable price one of the constraints of a regular website checkout and payment system is that it does not generally allow for any negotiation on price between the client and the service provider, this can be especially problematic for incoming tour operators who want to be able to provide custom made packages according to the unique needs of the client. Current Payment Options for Inbound Tour Operators Online credit card acceptance it is possible for an inbound tour operator to install a shopping cart and a secure credit card acceptance payment gateway on their website. This allows the client to choose the options they want and check out in a simple and efficient manner. It does however eliminate an element of discussion and negotiation which is often present in inbound tour operations. As it requires all prices to be fixed there is no accounting for group discounts or seasonal rates. Telephonic credit card acceptance it is also possible for the inbound tour operator to take payment telephonically after the final price is agreed upon. This however is much less secure, and many clients would be hesitant to give their credit card details over the phone. Cheque similarly the client can write a cheque and post it to the tour operator. This however is not particularly secure for the tour operator who has to trust that the cheque is actually on its way and that it will make it through the potentially unreliable postal system. EFT bank transfers have the benefit of being secure for both parties and are generally cleared within a few days. However, they generally come with high charges as compared to other cross border payment methods. Cash on delivery it is possible for tour operators to accept cash on delivery, i.e. only take payment from their clients when they arrive at their travel destination. This may be easier and more convenient for the client but it is a big risk for the tour operator. Top Considerations When Choosing a Payment Option Security it is important to consider the level of security a payment option offers, both for the service provider and the client. Privacy users can be concerned about the privacy of their information when making online payments and it is important that their details are not compromised. Familiarity some clients may be uncomfortable using a payments system that feels to different or unfamiliar to them. Convenience the payment method should be as convenient and easy to use as possible, for both the client and the service provider. iveri Payment Technology 2015 Page 5 of 6
DiVert iveri s Solution for Inbound Tour Operators iveri, a top payments technology company in Africa, has identified the need for Inbound Tour Operators to accept payments from international clients in a secure and convenient manner. To this end they have developed DiVert a secure online payment platform which is an ideal remote electronic payment solution for merchants such as Inbound Tour Operators who need to negotiate a final cost with their customers before receiving payment. How does DiVert Work? DiVert is designed for merchants who have remote customers that they wish to prompt for a card payment on a regular or ad hoc basis. Cardholders receive a personalised message requesting them to complete the transaction. DiVert messages are personalised with the customer s name, exact amount and unique merchant reference number. Most importantly, the customer s card details are entered in a secure environment and never seen by the merchant. Key Benefits of DiVert Instant delivery means a quick response time from your customers. Simplified payment option makes it easy for customers to effect immediate payment. Adds a payment response to your collections communication. Reduces PCI DSS scope for merchants. iveri Payment Technology 2015 Page 6 of 6