Mainstream media headlines about the launch of Facebook's
cryptocurrency, known as Libra, have so far been dominated by government and
That's not surprising given probes into the social media
platform around privacy and wider concerns about cryptocurrencies, but, for
travel, there are a few interesting elements about Libra.
The early involvement of Booking Holdings, Lyft and Uber
will not have gone unnoticed although some technology outlets report that the
partnerships are nonbinding and companies can walk away at any time.
That said, payments are already a huge part of travel by
virtue of the size of the industry and the huge volumes of transactions
The huge volatility in cryptocurrencies, such as Bitcoin,
will have scared off many travel industry players so far but perhaps, as
suggested by Roberto da Re of travel payments startup Travel Ledger, Facebook
can capitalize on this.
He says that on the one hand the Facebook move will make
more people take notice of cryptocurrency in general and perhaps give the
perception that it can provide a better or more sustainable model.
Da Re sees this as Facebook's best attempt so far to get
into payments but says its adoption is likely come initially in low-value items
such gaming and/or in-app purchases.
"This is where people will experiment with it and then
depending on the experience and how comfortable they are, they will potentially
migrate to bigger purchases. The fact the Booking.com is involved shows how
important payments are in travel but I don't it's going to be a catalyst, I
think we're going to see usage from the bottom up."
He also points out that key to the success of something like
Libra, and other cryptocurrencies, is the "on-boarding, how traditional
Fiat currencies are transferred to digital currency and what the costs might
"It's a key bottleneck. The gatekeepers are the ones
that have the most to lose but the easier the on-boarding is, the easier the
adoption is. Are the banks going to play ball, are governments going to make it
easy? That's the gate that needs to be opened in order to then facilitate
Nadim El Manaway, chief executive of Arise Travel, also sees
pushback from governments coming down the road.
He says: "Real regulatory challenge is going to come
from governments that are worried about losing the monetary levers (interest
rates, money supply etc.) they use to control the performance of their
economies. The idea that this power could be in the hands of a consortium of
tech giants already sounds scary to many people."
Oversight and issues
Already, it has been widely reported that Maxine Waters,
chairwoman of the House of Financial Services Committee in the U.S., has
requested that Libra stop development until hearings to scrutinize it have
The fact that Libra is a stable coin will help resolve some
of the issues. Many travel companies currently work with BitPay to manage the
El Manaway agrees that stable coins remove much of the
volatility and says he believes there could be "a lot of value and
incentive for the industry to adopt crypto for certain payment and business
Looking at the potential for Libra, he adds: "We
believe Libra is targeting the developing world and the 1.7 billion unbanked
individuals globally. Today, many of these individuals are excluded from
booking travel online because they don't have a payment method they can use to
secure a reservation.
"Libra (or another stable-coin) could be the catalyst
that opens up online travel to a huge chunk of the global population and
increase the number of reservations made through online channels."
Seen in that context for travel, it seems a smart move by
the likes of booking and Uber who already have investments in developing
countries and are eyeing the impact of digital development as millions more
But for the population that already has bank accounts and
access to other payment methods, there are fewer advantages to using Libra,
says El Manaway.
He also says that while travel companies could avoid some
payment processing fees by offering Libra and encourage use of the currency
through incentives, it will likely become another payment option in online
Overall, it no longer feels as if cryptocurrency is just
hype with an increasing number of travel companies making it a payment option
and a number of startups springing up around it in payments, smart contracts
BitPay, which processes cryptocurrency payments for travel
companies including Corporate Traveller and Destinia, says that its total
travel industry transactions processed increased by 13% when comparing the 12
months from June 1, 2017, to June 1, 2018, with the same period from 2018 to 2019.
It adds that the average value of payments increased by 21%.
IATA declined to comment on Libra but Eric Leopold, director
of financial and distribution services transformation, says the organization
sees opportunity for cryptocurrency in reducing costs, saving time and in
increasing safety of fund transfers.
"In a closed environment, without volatility or
speculation on the currency, cryptos fit well into a broader scope of digital
transformation of financial processes. Additionally, we see payment becoming
increasingly a part of the customers' experience and it is not a just a back-office
process. Therefore, having choices and new alternatives is going to foster
innovation and creativity."
He adds that IATA has implemented IATA coin, it's own crypto
currency for payment between airlines and that it's also exploring the
potential for "digital finance" using shared ledgers and smart