“Cost reduction and fraud prevention are key drivers for open banking adoption, and it is replacing cumbersome, manual bank transfers and some larger card transactions,” writes Donal McGuinness, CEO of Prommt. 

The resurgence of travel in 2023 is seeing guests return with an increased appetite for bold adventures, luxurious stays, and tailored experiences that cater to their unique preferences. They are seeking exceptional service and customised offerings that go beyond the typical tourist experience. With the rise of digital nomads and remote workers, “bleisure” travel – a combination of business and leisure – has become increasingly popular. Staycations and wellness tourism have also emerged as notable travel trends, and many hotels now cater to this segment with curated wellness experiences that supplement traditional spa offerings.

The post-pandemic era of travel presents exciting business opportunities, but the road to recovery has not been smooth with increasing inflation, supply chain disruptions, staffing shortages, and soaring energy costs. With the current challenges faced by the industry augmented by higher guest expectations, there needs to be a shift from viewing payments as a back-end function to recognising that payment is the first interaction a guest has with your brand, and, furthermore, that innovation in remote payments is a lever for profitability.

Accepting payments over the phone can leave hotels vulnerable to chargebacks and card fraud, particularly when sensitive card details are handled insecurely. Chargebacks can take a toll on a hotel’s profits and take months to filter through. Many hoteliers view fraud and chargebacks as a necessary cost of doing business. Shockingly, up to 86 percent of chargebacks may be instances of intentional or unintentional friendly fraud, with nearly 50 percent of cancelled reservations and travel bookings being disputed through chargebacks. Ignoring this issue can have severe consequences on revenue, as every chargeback incurred results in a penalty fee from your payment processor that can be pretty significant. Excessive chargebacks can even lead to the termination of your merchant account.

Disputing chargebacks is a big headache for accounting staff, requiring hours of meticulous auditing and record-keeping. Without professional assistance, it can also be difficult to satisfy the processor’s documentation requirements. This is why prevention is key. By taking steps to protect your business and prevent chargebacks ahead of time, you can save time, money, and resources while safeguarding your bottom line.

The implementation of open banking payments is a game-changer for the hospitality industry, as it is estimated to reduce transactional fraud by up to 61 percent by 2024. Moreover, studies highlight that approximately 70 percent of guests would feel comfortable paying for their hotel room through open banking. Open banking has gained traction due to robust regulatory backing from governing authorities. Helped also by the resulting elimination of card processing fees and chargebacks, as well as faster payment settlement times. Consumer adoption has been very high due to the widespread use of mobile banking and consumers’ changing payment preferences.

Customers are redirected to their bank’s app for biometric authentication after confirming a purchase, and there is no built-in chargeback mechanism. This means that customers cannot dispute open banking payments as it is the payment provider that executes the bank transfer on the customer’s request. As sensitive and personal data isn’t passed between you, your customers, or your staff, the risk of compromised customer information is eliminated. Cost reduction and fraud prevention are key drivers for adoption, and it is replacing cumbersome, manual bank transfers and some larger card transactions.

Now more than ever, hotels need a streamlined, technology-driven solution that converts risky telephone and other remote payments into a secure, merchant-branded payment process that drives operational efficiency. Open banking can help hotels protect margins and radically enhance the security of their remote payments ecosystem by eliminating high card transaction fees and costly chargebacks.

Serial entrepreneur Donal McGuinness is CEO of Prommt. He studied Computer Science at DCU and Telecommunications Engineering at DIT and spent the early years of his career in the telecommunications industry. His experience in mobile payments dates to 1999 when he founded his first mobile payments company, ItsMobile. Donal was also a Non-Executive Director of the Irish Internet Association from 2009 to 2011 and a movie distribution business from 2002 to 2020.

In 2016 Donal joined a silicon valley startup in the identity verification space called Danal inc, where he set up and grew the global business outside of the USA as General Manager of EMEA until 2019 when the business was acquired by Boku Inc for $112 million USD. Donal joined Prommt as CEO in 2019. He is an innovator and is passionate about payment innovation.