iOL Pay aims to become the world’s first hospitality fintech unicorn by the end of 2022.
In the world of e-commerce, consumers have become used to making purchases with the click of a button, except when it comes to the hotel industry where payments are still processed manually, upon guest check-in.
This is a global challenge facing the sector and one which a Dubai-based start-up is set on resolving through the creation of iOL Pay, a platform that will provide hotels with a single automated payments solution and support global payment compliance and standards, according to its founder and CEO Faisal Memon.
“Fundamentally, payment is broken in the hospitality industry. When you book a transaction with an airline, it takes your money immediately, but hotels don’t operate that way and payment is made through a physical card upon check-in. This makes payments in the hotel industry 100 percent manual in the way they are dealt with,” said Memon.
“Hotels are complex beasts. Hospitality is truly cross-border because hotel chains manage properties in multiple countries and more importantly customers are coming from all over the world as tourists. When you have this kind of situation, there are a lot of challenges that come along with it,” he explained.
One of those challenges is related to exchange rates whereby a customer’s credit card is charged in the hotel location’s currency as opposed to the card’s currency.
“On the customer’s side, there is an inherit cost attached to a cross-border foreign currency transaction. On the hotel’s side, we have the same problem, whereby a property processing an international card pays higher fees for its banks,” explained Memon.
“In this way, consumers are losing and the hotel is losing so we decided to change that. We looked at how we can save consumers on foreign exchange rates and how can we help hotels scale their ability of being able to process payments without paying a lot of fees,” he continued.
The iOL Pay platform also provides customers with a single unified solution, using its strategic partnerships which encompasses global payments, virtual cards, merchant wallets, remittances and FX.
“Some local payment methods, such as Ali Pay or We Pay, are not recognised by international hotel chains, which could create frustration among customers who end up going to an online travel agency that offers their payment methods, meaning the hotel will have to pay that provider commission,” said Memon.
“The single most important step in an e-commerce transaction is the payment and hotels can end up missing out on that by not providing a variety of payment methods to their customers,” he added.
There is also the issue of fake bookings, which could cost hotels thousands in potential revenue-loss when a room is booked for a period of time only to end up being cancelled, explained Memon.
These are among the challenges the hotel industry faces because of its outdated payment processing capabilities and as such Memon said: “The mission of iOL Pay is to disrupt the current payment mechanisms that exists, with too many middlemen and difficulty in scaling. We want to be the single unified central cloud platform where we help hotels scale globally and allow consumers to pay in their local currency and payment method.”
In doing so, iOL Pay aspires to be the world’s first global hospitality fintech unicorn within the next 12 months, while expanding its geographic footprint to reach 19 countries.
Through 2022, iOL Pay, in conjunction with its strategic partners, will enable clients to manage over half a billion dollars in Total Processing Value (TPV) from across all of the platform’s revenue streams, which will grow over six times by 2023.
“The beauty of our business model is in its scale; at the end of the day, what everyone looks at is the volume. We are 100 percent focused on the hotel industry, which is quite big in terms of the volume of business,” said Memon.
“I would probably need thousands of e-commerce clients to achieve the same volume that one global hotel chain provides me with, and here we are still talking about room revenue alone, not the spas and other services. Being a unicorn is a function of revenues and given that we are so specialised, when we can process such volumes, the situation of being a unicorn will not be an issue,” he continued.
iOL Pay is in “deep talks” with several regional and global hotel chains in their “quest to reimagine how hospitality businesses transact and manage payments”, said Memon.
(Except for the headline, this story has not been edited by The Finance World staff and is published from a syndicated feed.)