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Booking Holdings’ new Fintech unit is busy working on ways to enable travelers to avoid bank and credit card companies’ gotcha foreign exchange fees.
While the primary purpose of Booking’s Fintech division, announced several days ago, is to “accelerate” bookings, enabling travelers to pay when and how they want in their preferred currencies, another purpose is to develop new revenue streams, said Daniel Marovitz, Fintech’s boss and senior vice president, in a Skift interview Friday.
The goal is to offer travelers “a great foreign exchange rate, which is maybe better than they would get from their credit card or from their bank, but do it at such a scale that we can make some money on the foreign exchange,” Marovitz said.
For example, this would apply to travelers from the U.S. who find that all of their booked hotels in Europe are priced in euros. This could be the case for the German traveler taking a vacation in New Zealand, as well.
The company wants to offer “bookers a great price and take anxiety out of the traditional open your credit card bill at the end of trip, not knowing all the fees and bad exchange rates that you are going to get stung with,” he said.
Marovitz said this sort of work is under way in various stages across Booking Holdings, which includes Booking.com, Priceline, Agoda, OpenTable and Kayak, while some elements are being piloted.
“We have some pieces of this which we’ve been doing for some time,” he said. “Some pieces of this which are in experimentation so we have a lot of work on foreign exchange ongoing,” including buy now and pay later, and the ability to pay for travel in installments.
“So those are things that are all in pilot mode across Booking today,” Marovitz added.
Booking.com, the parent company’s largest brand, began a transition toward adding prepaid hotel bookings to its pay at the hotel foundation about five years ago. Marovitz said Booking built a new payment system from scratch with the goal of ease the complexity of travel payments, both for travelers and partners.
Despite the fact that travelers in Covid-ravaged 2020 and 2021 are still looking for the flexibility that paying at the hotel instead of prepaying provides, Booking Chief Financial Officer David Goulden said in May “we still think that the merchant business in total in 2021 will be a slightly higher mix than it was in 2020.”
While Booking has been working on alternative payment systems for at least five years, its new Fintech unit, which will negotiate on some tax matters and procurement for the brands, now has its own profit and loss statement and funding, with Marovitz reporting to group CEO Glenn Fogel.
The Fintech unit, based in Amsterdam and Shanghai, plans to add more than grow to more than 400 employees by the end of 2021. Only about 7-8 percent currently are based in China, which pioneered alternative payment systems such as WeChat Pay and Aliplay.
Asked whether Booking Holdings feels trepidatious about operating in China, where the government has cracked down on tech companies in travel and beyond, Marovitz said: The company is “very aware of the complexities of China and [its] orientation toward technology companies, and we’re always evaluating the situation.”
Marovitz said the Fintech unit will likely do pilots with partners to enable travelers to pay in cryptocurrencies, but he’s not particularly excited about the prospect because the currencies are so volatile, and not many people use crypto to buy things yet.
He said “we will be led by the market,” and there is no reason to be ahead of it.
The Fintech Revolution
Booking’s establishment of its Fintech unit comes as fintech has become one of the next big things in travel.
Indonesia’s Traveloka transitioned toward financial services during the beginning of the pandemic when travel all but ceased, and has expansion plans.
AirAsia Digital bought out superapp Gojek’s Thailand operations, including its payments’ services, to enhance AirAsia Digital’s Big Pay unit. Big Pay applied for a digital banking license in Malaysia recently in a bid to offer individuals and small businesses there a panoply of financial services, the company said.
AirAsia hopes the Gojek deal willl enable it to better compete with rideshare, delivery and financial services leader Grab in Southeast Asia.
“If we’re given the license, we’ll be able to reach more Malaysians with a wider range of services — all with the goal of building a stronger Malaysia,” said BigPay founder and CEO Salim Dhanani in a statement.
Correction: Booking’s Fintech unit plans to grow to more than 400 employees by the end of 2021, but doesn’t currently have more than 400 workers, as Skift initially reported.