As consumers extend their spending across the globe, the various hurdles they face are becoming targets of innovation.
Travelers are confronted with many different currencies and payment options, but they have few ways to cope with these varying systems other than to plan ahead with a wallet full of different types of cash and other payment instruments that may be unique to each of their destinations.
"The travel industry has always been a little bit behind in payment acceptance," said Sander Maertens, travel expert at Adyen, a global payment services provider. "The legacy systems built in the 60s, 70s or 80s were never meant to be used in the fast moving e-commerce environment."
The situation is no friendlier with e-commerce, as more consumers consider buying from merchants in other countries. Adyen supports a little under 300 payment methods, many of which are in Asia where Adyen serves a number of local merchants wanting to sell into North America.
In the past couple of years, Adyen has begun working with about 20 airline clients, including Air Berlin and KLM.
"Airlines are operating on extremely thin margins; any time they can book customers on their own site, that's the cheapest way," said Maertens. But "customers are moving to these third-party systems like Expedia because they offer more payment methods."
Adyen has helped KLM develop its social media customer service process. KLM is very active on social media, answering customer concerns within an hour. Most of the time, a customer asks about re-booking, which carries an additional fee. Customers didn't want to send payment credentials over Facebook or Twitter, so Adyen built KLM a tool that opens a pop-up payment box when consumers click a link, Maertens said.
American merchants sometimes forget that their magnetic-stripe cards are in the minority in other parts of the world, said Kamran Zaki, president of North America at Adyen.
For example, in Canada the majority of debit cards are chip-and-PIN enabled, meaning they can't be used to pay for items online because most checkout systems don't take the PIN into account, Zaki said.
Prepaid cards, are an option favored by travelers. In August 2013, MasterCard Inc. partnered with Travelex Currency Services to build a multi-currency, multi-purse prepaid card for U.S.-based travelers was one of the first chip-and-PIN cards that could be obtained within the U.S.
Adyen also works with hotels, such as citizenM, a hotel chain that's expanding into major cities in Europe and North America. The chain needs to be able to take online bookings, in-person bookings and sustain a call center. To accept local payments, the company would have to partner with third parties for both the Web and the physical point of sale.
With five to 10 payment providers, the bookkeeping and reconciliation becomes a hassle, said Zaki. Adyen steps in as the client's single relationship, handling any partnerships needed to accept payments in different regions and channels. This lowers costs because "you don't need an army of employees to manage all those partners," Zaki said.
While Adyen and a crop of other merchant payment services providers are hoping to remove the barriers of purchasing across borders with traditional payment methods, other companies are experimenting with digital currencies, such as Bitcoin as an option for consumers who do not have credit cards.
"Many airlines, hotels and car rental agencies will not book anyone without a credit card," said Alan Safahi, CEO of ZipZap, a company that's building a global money transfer network by partnering with retail locations to enable consumers to deposit cash for bitcoins.
ZipZap recently expanded its cash-to-bitcoin services into Latin America, covering Mexico, Peru, Uruguay and several other countries. The company just raised $1.1 million in investment and added former Wells Fargo executive Jim Griffin as its senior vice president of currency and foreign exchange.
"Cross-border travel is especially challenging from a payments point of view, due to currency conversion and foreign transaction fees charged by card companies," Safahi said.
Safahi said international travelers that need to get local currency out of an ATM overseas can pay as much as $5 per transaction for the card issuer plus a 5% to 10% in currency conversion fees by the ATM operator and the bank.
"Bitcoin is a universal currency so a traveler can use their Bitcoin wallet to pay for goods and services in any country without any fees," Safahi said. "We would like to see people travel globally without having to pay exorbitant currency conversion fees and penalties associated with traditional card payments."
ZipZap plans to partner with ATM providers in airports where consumers can convert their bitcoins to a local currency. The network will provide a cash-out option in more than 90 countries and will be rolled out by 2015, said Safahi.