The future of payments: Fintech’s role in Hospitality Transformation
Published: 2023-10-17 09:05:32


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Payment methods have evolved greatly over the years. Fintech solutions have played a vital role in eliminating challenges and global trade runs friction-free and with ease, all thanks to the massive technological advancements that have brought about disruptive changes across industries. The hospitality sector is no different.  

Let’s see how fintech has revolutionized the hospitality sector, driving business and growing revenue manifold. 
**
Fintech adoption in Hospitality **

Fintech includes a smorgasbord of solutions and services that have the ability to transform the way we conduct transactions, how we interact with money, and how businesses are conducted across the globe. In a post pandemic world, everything contactless had much demand due to the heightened sense of security contactless transactions gave the consumers, especially at a time when the world was reeling under an infectious virus.  

Every sector expedited digital adoption and the spate in digital payments was well reflected globally. Digital payments breached the trillion mark and is anticipated to grow at a rate of 14% in the coming year. The hospitality sector was perhaps the front runner in digital adoption as it was an existential question for hotels. Adopting fintech was the only way forward to ensuring a sterling guest experience for hotels and restaurants.  

Let’s dive deeper to understand how Fintech played a critical role in hospitality sector’s unprecedented transformation: 

**Contactless Payments** 

There is no doubt that contactless payments are forerunners of a **[digital transformation in hospitality](https://smartcheckinn.com/)** and are the biggest enablers of fintech-led revolution in the hospitality sector. Be it mobile payment applications, digital wallets or e-wallets, tap and pay using smart devices like smart watches, digital payments have truly made transactions so effortless and hassle-free. One tap and payments are settled. This has significantly enhanced guests' convenience giving them an elated user experience, increased speed of transaction and boosted security.  

**Mobile Wallets** 

With the rise in digital payments, a number of payment solutions have emerged. One of the top contenders in this list is the now ubiquitous mobile wallets. Though initially a prerogative of the tech-savvy younger generation, today mobile wallets have become more popular among a diverse customer base, thanks to their convenience, ease of use, and elevated customer experience it offers. Also, it eliminates the risk of carrying an actual wallet stuffed with cash. Why run the risk of walking around with wads of cash when several mobile payment options are so easily and effortlessly available.  

**P2P Payments **

Fintech drives Peer-to-Peer payments where guests can easily split bills for shared experiences like booking accommodation or availing services offered at a hotel premises. They can also use this technology to send money to anybody during travel.  
**
Blockchain and Cryptocurrencies **

Modern businesses are more open to embracing the latest technologies like blockchain and cryptocurrency to explore its potential in enhancing customer experience. These technologies work based on a distributed ledger that heightens security and transparency. Such a technology-based solution will be especially beneficial to international guests as it reduces transaction charges involved in cross-border payments. 

**Digital Receipts **

It is common knowledge that electronic invoices and digital receipts get paid faster than traditional paper invoices. Traditional invoices are clunky and inefficient. Tracking and storing them can be daunting, time-consuming, and labor-rich. Digital receipts are fast replacing the traditional ones. These records are not just efficient, time-saving, and reduce operational costs by eliminating manual tracking, but also make tracking much easier, especially for business travelers.  

**How fintech revolutionized Hospitality sector: **

How has the fintech revolution benefited the hospitality sector? 

Let’s dive straight in: 

**Superlative guest experience: **

Digital payment methods significantly reduce wait times, and streamline check-ins and check-outs, ensuring a frictionless experience for guests.  
**
Higher efficiency: **

Fintech solutions have eliminated manual processes which were error-prone and inefficient. Automation reduces errors and makes the entire process cost-effective. 

**Superior security: **

The popularity of fintech solutions is mainly attributed to the heightened sense of convenience it offers. But another significant factor is the guaranteed superior security. Using technologies like data encryption and tokenization, multi-level authorization and verification, OTP, etc, fintech solution ensures better security to both guests as well as merchants.

**Data-driven insights: **

Like they say, whatever is good for your customer is definitely good for your business too. Most fintech solutions come with a robust dashboard that gives great insights into data on customer behavior patterns, and often businesses can generate reports based on history of a guests and use these insights to offer a curated experience so much that the guests will appreciate the customized offering. Personalized experiences are always a huge hit among consumers, and it turns them into brand ambassadors in the long run! 

**Cost-reduction: **

A host of payment modes emerged in the past decade but most of these suffered from a huge drawback- dependencies and implementation costs. Physical payment methods including card payments required infrastructure investment, even if for one-time. Cashless and contactless payments have eliminated this reliance on infrastructure. 

From the above discussion, we can safely surmise that digital payments are indeed beneficial to businesses.  

But are they without any limitations at all?  

Or  

Do merchants face implementation hurdles or other dependencies that concern them:  

**Let’s discuss the Challenges and Concerns that needs to be addressed: **

There is scant doubt that fintech has transformed the hospitality sector. But there are a few pressing challenges that needs attention: 
**
Security: **

Higher security is one of the benefits of fintech solutions, nonetheless, there are concerns like cyberattacks, and data breaches are rampant. Fintech solutions enable digital payments and mobile or web applications serve as conduits for these digital payments. There are portals that save sensitive customer data and sadly despite the best efforts, data breaches are rising at an alarming rate. This is a serious threat that needs to be addressed at the earliest.  

**Integration: **

No data in the existing infrastructure must be lost. Businesses will have legacy systems that have vast amounts of data which need to be preserved no matter what. This is where integration challenges come to the fore. Ensuring that all existing systems are properly, and seamlessly integrated and smooth flow of information is maintained is critical. This can make the implantation process time-consuming, complicated, and costly.  

**Adoption Rates: **

Since the advent of digital payments, the most debated challenge is the “inclusion” challenge. Not everybody is tech-savvy, not every guest prefers digital wallets, and definitely eliminating cash transactions completely is not even an option. There are still a lot of people, especially senior citizens, who are hesitant towards using digital payment solutions and they still trust cash only.  Though adoption rates were worrying initially, in countries like the UAE, India, Sri Lanka, China, Sweden, France, etc., the adoption has been stupendous. Interestingly, in the US, there is a heavy dependence on card payments.  
**
Regulatory Compliance: **

It is common knowledge that the financial sector is the most strictly regulated one. With stringent crack down on counterfeit notes and money laundering activities, regulatory compliances are the most strictly imposed in the finance sector, in a bid to contain financial fraud. This means that the hospitality sector must navigate this complex maze of regulatory compliances imposed to curb all sorts of financial and cyber fraud and also data protection regulations. For any business to conduct business anywhere, regional compliances must be adhered to.  

**Privacy issues 
**

Data protection regulations are increasingly being imposed with heavy fines for noncompliance. Today’s well-red consumer is fully aware of his right to privacy and governments are going full throttle to ensure that consumer’s privacy is secure. Thus, the hospitality sector must ensure that ethical data handling is top priority.  
**
Key Takeaways: **

Technological solutions can drive revenue, streamline processes, elevate customer experience, and play a role in cost reduction. With a lot of high-end technologies like AI and ML emerging, the hospitality sector can leverage these to serve their customers better. AI and Personalization, biometric authentication, tokenization, centralized payment platforms, decentralized finance or DeFi can improve transparency and make financial transactions more cost-effective.