Calling the travel payments landscape complex is an understatement. From a B2C perspective, travel companies are dealing with the increasing number of ways to pay and trying to get to grips with what mechanism to offer to which customer. Then there’s B2B travel payments, which bring their own set of challenges.

It’s little wonder then that many travel payments startups have entered the market, while existing players are putting more focus on the payment services they offer, all seeking to help remove friction from the process and drive efficiency and, ultimately, conversion.

In a Q&A with PhocusWire, Damien Pfirsch, chief commercial officer of Agoda, discusses the payment landscape in Asia, where credit card penetration is lower than other geographies and many countries have specific payment mechanisms.

What are the consumer expectations for Agoda around payments?

Agoda is essentially a marketplace where we’re allowing customers to book properties. In general, what they expect is that we make their lives easier and cheaper. Easier as in offering them a wide selection of properties that they can book everywhere without having to speak the language or know the phone number. When you travel domestically it’s one thing, when you have to travel internationally, increasingly you rely on [online travel agencies]. When it comes to payments, it’s exactly the same thing, it’s all about the convenience. So today in many countries in Asia especially, you have consumers who are not paying via credit card. They are using some form of mobile app, Alipay and WeChat pay in China, KakaoPay in Korea, LINE Pay in Taiwan. In Thailand everyone uses a bank app, which encompasses the Thai QR system, which has been developed by the government. In India you have the same. So people are using their phone to pay, and most don’t have a credit card and would expect to be able use the same method when they book a hotel, which they wouldn’t be able to do if they book a product on an OTA that doesn’t integrate all those payment methods or if they book direct with the hotel.

We are offering 111 different payments which are non-credit card as of today. It could be an app, it could be someone in Thailand enters a 7-Eleven and says this is my booking from Agoda, please scan it, and the 7-Eleven gets the cash from the customer. It could be that they do the same from an ATM in certain countries. We really try to go very deep in each of our core markets to make sure the payment method that the customer is most used to and most comfortable with is the one we offer them. 

What are the main challenges of managing that number of payment methods and complexity?

From a platform perspective you’re looking at two things: One is convenience, and on top of that it’s conversion and cost. Not every payment method has the same cost. We want to make sure we’re not charging the customer for any of those payment methods, so it’s on us to make sure we negotiate the right conditions and find the right trade-off internally to be efficient and offer the payment method they want at no additional costs. And then, of course, from a technical perspective not all of those methods are converting as well, and we have to work around the challenges of technology to offer a seamless payment experience.

For the past 15 years, it’s probably an exaggeration to say we are as much a payments company as a travel company, but being in Asia and having to cater to so many and such a varied number of customers, we have a lot of different payment methods so we’re forced to develop merchant capabilities that other OTAs didn’t have to because everyone has a credit card.

What role would you say these diverse payment mechanisms are beginning to play in personalization?

The payment mechanism is not only to deliver what the customer wants, but we also offer additional services such as pay later. Many companies such as GrabPay and Shop Pay now have a pay later product, so by integrating the main pay product you can start offering payment facilities, which again makes it easier and cheaper for the customer. They are also very often marketing partners. Some have loyalty schemes incorporated, so each time you use GrabPay you get GrabPoints, and you can also redeem GrabPoints for certain things or earn them. A few years ago we had a lot of partnerships with new providers launching pay later offerings launching in the region, and they were financing campaigns on Agoda where they were saying, “If you use our payment method to pay later on Agoda, you get a further 5% discount.” So they are a marketing partner as much as a payment partner, and it can help them offer more services to customers. They increase usage of their payment method because many are competing with existing payment methods.

If you’re a customer in Indonesia, you probably have the choice between three different wallets and two different pay later methods. You most likely don’t have a bank account. I was reading a stat from a report that said 70% of the population in Southeast Asia is either unbanked or underbanked, which means they are not using their bank account as their primary way to pay and store money, so there is a lot of competition for those customers.

Is buy now, pay later (BNPL) big in Asia?

We see it growing. It grew more in the past few years, but there is still potential. I think it will come back eventually as some of the credit terms are simplified. BNPL is very dependent on how the money flows into different debt systems, so that’s something that’s a bit slower these days, but I’m sure it’s going to accelerate again. There is definitely a big appetite. With BNPL we’ve been developing our own product on Agoda. We’re working with Visa and Mastercard to develop product on top of the credit card, and you have all those wallets, which are trying to develop their own, and you even have stand-alone buy now, pay later companies. 

Do you see payments as a way for Agoda to differentiate itself?

Definitely. In terms of localization, we think payment is probably 40% of how you localize yourself. Payment is a key factor; it’s something that resonates with customers. Language is also a key element, certain descriptions of the properties, all those are important, but at the end of the day if you don’t have the payment method the customer wants to use, you’re going to have friction at the bottom of the funnel. 

What we have been playing with recently with some of the banks is [the ability to] earn points as cash back. But more importantly, burn some of your points for payment on Agoda. It’s something we have been doing on white label for some time, for example, in the [United States] with Citibank. What we’re trying to see now in Asia, where those white labels are less prevalent than in the U.S., is extending that redeem capability on Agoda, and so far the signs are quite interesting.

What about the fintech opportunity? We’ve talked about BNPL, are there other services that OTAs here are doing that you’re also looking at?

We have looked at insurances, we have been working with different insurance companies for flights. That’s a natural ancillary and a good guarantee you can offer to your customers. We have been looking at cancel for any reason products as well. We do see some good potential. It’s something we want to bring slowly to the market to make sure the customer has a very good understanding of what they’re paying for because there is always a cost for accessing some of those options, but we’re definitely looking forward to testing more of those services in the future. 

Switching to B2B payments, what are the challenges? Fragmentation, fraud, interoperability and how is Agoda addressing them?

Fraud is something we have learned to deal with over the years. We have our own team, and we have our own machine learning algorithm, which gives us signals on potential fraud abuse. Our approach has been twofold: We have combined an advanced machine learning algorithm and a team of people who are also looking at certain cases, and by combining the two we see very good results in fighting fraud.


We are offering 111 different payments which are non-credit card as of today. It could be an app, it could be someone in Thailand enters a 7-Eleven and says this is my booking from Agoda, please scan it, and the 7-Eleven gets the cash from the customer. It could be that they do the same from an ATM in certain countries.

Damien Pfirsch – Agoda

After fraud, I think it’s just the sheer complexity. It’s a lot of different payment methods. They all have their specificities. You need to maintain different connections to them, to be able to route them effectively into your merchant platforms. You need to be able to upgrade to new API [application programming interface]. It’s not enough to just connect to them once. For example, you may have one provider that launches as a wallet, and a year later they contact you and say, “Hey, we have a pay later product, it’s growing, do you want to integrate it as well?” It’s constant work in terms of technology.

How big an opportunity would you say B2B payments are for Agoda?

It’s something we have been looking at. Our offering as a service is something we would need to have a license to do so, but it’s always interesting to think about how you can externalize some of the capabilities you have built for yourself. One way we do it is when we create a white label for partners, such as airline, we offer them all our payment capabilities. It’s the same for the API; we’re working with a number of partners through an API to sell them inventory, and we’ve added different payment capabilities to the API.

Getting a license would be of value. It’s something we have been thinking about because it would possibly open a new door. It’s not a simple decision but an interesting thought.

Is there an acceptance in the industry of the importance of payments?

I think so. People understand as things become more and more competitive, players are trying to find new buckets of efficiency at different parts of the funnel. If you’ve been operating an antiquated payment platform, you probably have a lot of inefficiency in there in terms of rates and conversion or other factors. More and more players will be looking at that going forward. In just the world of credit cards, there are hundreds of possible ways to optimize.

Do you see a particular role for AI in either B2C or B2B payments?

With AI, as we touched on, the biggest application so far is fighting fraud. A lot of efficiency comes from how you route certain transactions, either through different partners or through different things. We’ve also seen good impact from using AI to predict the efficiency of those routes in terms of conversion. This relates to orchestrating your payments, and the decision you make around orchestration can be helped by AI. Also, in terms of personalization, you don’t want to give new customers who have never booked on Agoda a queue of 20 different payment methods as they’re about to pay, so you want to make sure through AI you increase your chance of ranking [the preferred method] above the other payments.

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