Internal Market, Industry, Entrepreneurship and SMEs

Electronic payment

Electronic payment

Electronic payment is a very common method for settling commercial transactions in the tourism sector.

The internet provides tourists with many advantages when it comes to making their purchases, including:

  • speed ​​and ease of access to tourism products and services
  • price comparison opportunities
  • availability of reviews and comments from other visitors
  • possibility of making a purchase 24 hours a day, 365 days a year
  • no national or international telephone charges

Electronic payments provide companies that benefit from tourism with new and innovative ways to source and acquire their income.

The following aspects will be covered in this article:

Electronic payments in tourism companies

Along with the benefits for the tourist, e-commerce can benefit your business. For example, you can gain a better understanding of your clients’ interests through their habits and payment preferences, while the process of paying electronically is quick and efficient.

If you decide to incorporate e-commerce into your business, it is important that you fully understand the EU legal regulations for e-commerce and requirements for each method of payment. This way you can ensure that your company procedures are compliant and up-to-date.

In the tourism sector, credit and debit cards are the most widely used payment method. Payment is made at the time of purchase.

With the options of cash on delivery and bank transfers, payment is made at a later stage – not during the purchase online. For these types of transactions you do not need a specific secure payment system for the time of 'purchase'.

Should you make online payments available, you must create a secure online payment platform for your customers, with no risk to their security or privacy.  

Security of electronic payments

A significant number of internet users discontinue their purchasing process at the last minute because the website does not inspire confidence. It is therefore very important that you include some type of security certificate on your website to reassure your customers and to give them confidence in you and your brand.

Security certificates allow you to encrypt data exchanged between your customer’s computer and the server on your website. This means that it is impossible for the data to be intercepted by a third party, so any sensitive data remains safe and secure.

It is common to find the 'closed padlock' icon and a URL beginning with 'https:'. These are symbols of secure payment, indicating that the page uses a technology called Secure Sockets Layer 'SSL'.

There are many suppliers of SSL certificates on the market and prices vary.

Electronic payment by credit or debit card

If you want to introduce online payments by debit or credit card, you should be aware of its advantages and disadvantages.

Main advantages of accepting card payments in your business

Take advantage of impulse buying

Customers can pay as soon as they feel the impulse to buy. This can work especially well if you offer the customer a product or service in real time, such as a ticket. This impulse behaviour usually occurs with local purchases and items that are relatively low-priced (less than €150).

Strengthen your image of security and credibility

Customers know that card payments provide a greater amount of user protection and this can make the customer more willing to buy your products and services.

You do not take on the cost of currency conversion

Your business receives the purchase amount in the local currency. The currency exchange fee is taken on by the customer.

Your client is more likely to upgrade their purchases

Customers who pay using credit cards are more likely to spend more as they can spread payment over a longer period.

The money is available to you more quickly

You receive the money from credit card payments within 24 to 48 hours – faster than other payment methods such as cheques or transfers.

Disadvantages of accepting card payments in your tourism business

High cost

Accepting card payments is not particularly economical for tourism businesses. If you are a small operator, you can expect fees of around 1.5% to 5% per transaction. On top of these fees, there is sometimes an additional cost of between €5 and €15 per transaction. If your prices are low, these costs may even cause you to think twice about accepting credit card payments as they can compromise your profitability.

High level of consumer protection

Faced with a conflict between the tourist and the business, card-operating companies tend to favour consumers. In such situations, the tourism business is the one that has the burden of proving and documenting delivery of product or service.

Requirements of entities that operate the cards

Entities operating the cards may require deposits of a higher value than the tourism company’s transactions in a given period of time (e.g. 1 month). Having this amount of money available can be a problem for many small businesses.

Cost of adapting my company website

If you take card payments on your tourism company website, your website must have a security certificate – this guarantees the encryption of client data. These certificates come at a cost.

Despite the disadvantages of taking card payments, many small businesses use payment gateways. It can be beneficial to know which providers are used by other entrepreneurs.

If you belong to an entity like a chamber of commerce or a business association, you can ask if it has an agreement with a provider of online credit card payments – this may offer you better rates.

Payment systems

For success in e-commerce, it is essential to guarantee security. Implementing an electronic payment system for credit cards involves fees and also requires you to install security measures on your website, which can be costly.

A solution to this problem is the use of e-payment systems which allow financial transactions to take place over the internet. There are a large number of companies which specialise in processing such payment requests.

Remember to include a section on your website that provides the terms and conditions for the electronic payment of your company’s products and/or services – this will protect you should anything go wrong.

When choosing a payment system, make sure that the buyer can purchase in their native currency. In tourism, buyers usually come from different countries around the world. It is therefore vital that the gateway supports payment in euros and in US dollars as a minimum – ideally, pounds sterling should be supported too.

To be prepared for all possible scenarios, the chosen payment system should also allow for currency exchange so that the customer can pay in a different currency.

When choosing the type of payment system, you will also need to consider the cost/investment that you need to make, depending on the characteristics of your company.