Travelport's eNett Expanding Virtual Card Payments To Several New Markets

Fast-growing eNett International by year-end plans to roll out its Virtual Account Number program in up to 15 additional markets including the United States, according to head of marketing and communications Marijke Timmers. Majority-owned by global distribution system operator Travelport, the Australia-headquartered company also plans to hire up to 50 people to support anticipated new business.

ENett last year experienced transaction volume growth in the triple digit percentages, with the number of payments settled up about three times that of 2012, according to Travelport president and CEO Gordon Wilson. Much of eNett's growth has been with online travel agencies that use the system to settle hotel bills, Wilson explained. "That's growing like a weed," he told The Beat, "but we are beginning to see corporate travel growth."

Growing interest from the corporate travel side stems from eNett's integration late last year into the latest version of Travelport's Smartpoint agency desktop application that allows agents to use it as an embedded form of payment. That development in the fourth quarter of 2013 helped eNett introduce its VAN product to Dubai, Hong Kong, Ireland and the Netherlands. It currently has customers in 45 countries and plans to expand to Europe and Asia/Pacific in the first half of this year and the United States and Canada in the second half.

"We've experienced phenomenal growth with VAN," Timmers said. "As the product gains traction in those markets, more agencies come on board and the volumes of transactions climb."

ENett toward the end of last year began targeting small and medium-size agencies, in addition to large enterprises, as the "majority of our competitors play in the big agency space," according to Timmers.

Supplier defaults are a "huge problem" for agencies in general, but especially can be detrimental for smaller agencies, Timmers said. "Between 2000 and 2010, 96 airlines went under in Europe," she explained. "If a small agency in particular is exposed to any one of [those airlines], that's going to take them down."

Although VANs work on a pre-funded model__meaning eNett does not provide credit__the virtual account is protected against supplier default and fraud by MasterCard, Timmers explained. Clients also have different foreign exchange options; VANs work in 27 currencies and 15 local settlements. Clients can lock a rate at the time they create the VAN without having to wait for settlement, Timmers added. Clients only are responsible for paying the cross-border fee, which Timmers said is below 1 percent, rather than the 1 percent to 3 percent fee banks charge on foreign exchange.

"Larger agencies that are more sophisticated may have foreign exchange hedging and most likely do local settlements, but for smaller agencies that don't have that level of sophistication there are different options available," Timmers said.

ENett also is focusing on developing relationships with suppliers, including hotel chains and airlines. "We want to help hotel chains with their inefficiencies as well as provide new forms of payments for their agency customer base," Timmers said. "We're working with airlines, especially low-cost-carriers, to offer VAN as a form of payment on their websites and as a form of payment for agencies to pay LCCs or a traditional airline."

EasyJet is a prime example. The airline "has adopted eNett as its means of payment in Europe for trade bookings," Wilson said. "As easyJet expands its trade booking, the settlement for those are not through the Bank Settlement Plans. It's through eNett or the customer's own credit card." He noted that corporate customers in Europe tend to be invoiced by their travel agencies rather than use individual cards, and the agencies pay easyJet with an eNett virtual card.

"[VAN] is preferred over the bank transfer, because although suppliers haven't received money, they can see it's in the pipeline," Timmers said.

When asked how eNett differs from other virtual card programs in the market, Wilson explained that "eNett is the cardholder," whereas in the case of AirPlus, for example, it is not and instead the agency is the cardholder. "That presents some interesting opportunities for us in terms of how eNett can be used to make payments, also as a credit card through BSPs." He also highlighted eNett's integration with Travelport's systems and agency workflow processes, certain currency capabilities and "an ability to onboard literally thousands of customers within days, which many of these other bank-issued virtual cards can not."

Unlike with Conferma, through which a client interested in virtual cards also must work within Conferma's network of banks, Timmers said that "with eNett, you don't need to be a customer of any bank, just an eNett customer."

As with many other virtual card providers, interest also is on the rise thanks to some recent high-profile credit card breaches. Wilson said that reducing the risk of fraud "definitely is a point in the engagement on the supplier side."

In reporting financial earnings on Thursday, Travelport noted that eNett "was a net contributor to adjusted earnings before interest, taxes, depreciation and amortization for the first time in 2013."