Written By: Tom Og, Co-Owner – Travel Professional NEWS®
In 1998 PayPal started in business seeing the need for international transaction settlement. A subsidy of eBay, it was started to offer sellers on eBay a way to not only sell products internationally, but to also settle the transaction across currencies.
Global settlement across currencies was a completely new concept at the consumer level. While the Airline Reporting Corporation had been doing it for decades to settle transactions between travel agents and airlines and miscellaneous suppliers, the idea that a small consumer could purchase something on eBay and then pay for it in just about every country on the planet Earth was indeed revolutionary. PayPal was perfect for travel agents to do business locally and globally.
Before that all that travel agents could do is try to obtain a merchant account at their bank, which was very difficult to do based on the incident of fraud in the travel industry settlement business. Also, local settlement with clients for service fees, suppliers or other charges was very difficult
Fast Forward to 2020
There are so many options for settlement that it makes heads spin. Let’s review some of the more popular ones so that you might find a better solution for collecting fees, paying suppliers and clients and so on. So here are the best of the best sites for international money transfers for suppliers and for receiving money from buyers.
International Settlement
If you are dealing with offshore suppliers or employees here is a list of established sites that will transfer funds from dollars to whatever currencies you are paying in. They all work pretty much the same as PayPal and are all competitive.
PayPal.com: I think just about everyone has used PayPal. PayPal’s value proposition is pretty outstanding. When you open an account with PayPal you can attach your bank accounts (as many as you would like), credit or debit cards or cash in your PayPal Balance. When you make a payment for a purchase you have made you select which source that you would like to use. The seller never has access to your bank, credit or debit card information which is important security in this day and age. If you are buying services say in Thailand or any other country, PayPal will convert payment into the currency of the country you are sending money. You are charged in dollars and the seller receives the right amount in their country’s currency, PayPal works globally.
If you are collecting money for service fees, travel arrangements or any other source, the buyer uses their PayPal account to make the payment and it then shows up in your PayPal Balance. It is very straight forward and happens almost instantly. You can use your PayPal Balance to buy other things with or move it into your bank accounts or wherever you would like.
Cost: Free to open an account
Fees: 2.9% debit and credit card + $.30 per transaction
Tech Lots of tools you can use on your website or apps
XOOM.com: A subsidiary of PayPal, XOOM delivers money to over 70 countries and does it with the highest level of security and at a guaranteed flat fee.
Cost: Free to open an account
Fees: Depends on amount and currencies. Easy to use fee calculator
Tech: N/A
XE.com: You can transfer right from your business or personal bank account. One of the highest rated money transfer companies in reviews. While they do not charge fees, they make their margins on the exchange rates between currencies. That is not to say that they offer lessor exchange rates, you just need to on top of what the industry is doing.
Cost: Free to open an account.
Fees: No fees
Tech: N/A
WorldRemit.com: Serving over 140 different countries, WorldRemit is both easy to use and also very reasonable. Just identify the country that you want to send to, the amount, how you want it to arrive and the person you are sending it to. Best of all, your first transaction is completely free.
Cost: Free to open an account
Fee: Based on the amount and country. You know the fee up-front.
Tech: N/A
Domestic Settlement: These sites are great for settling domestic transactions. Collecting service fees, payment for local tours and other transfers of money are easily accomplished with these tools. Many of these also have international capabilities, but the sites listed under International Settlement are the best choices.
PayPal.com: PayPal is great for both international settlement, as well as domestic. See the description above.
Google Pay For Business: Google Pay is completely integrated with your business profile on Google. It is easy to download the app and install it on your cell phone. The app is attached to your bank account and credit card(s) and makes it easy to either pay or receive payments for things like service fees, etc. Download at the app store.
Cost: Free to open an account
Fees: 2.9% credit, free debit card
Tech: Websites, apps and in store
Venmo.com: Owned by PayPal, Venmo is favored by millennials and folks who are involved with Facebook. The unique feature of Venmo is it offers a social sharing option when signing up. You can have Venmo download your Facebook friends and every time you make a purchase it will appear in their feed. You can also limit this option to friends that you add to Venmo or you can select total privacy. You can use Venmo anywhere that accepts PayPal. When you are checking out and click on PayPal it then gives you the option to use Venmo. Venders like Venmo because of the social interaction and exposure they receive when a purchase is made. Venmo is a good option for accepting service fees from millennials.
Cost: Free to open an account
Fees: 2.9% + $.30 per transaction credit, free bank account and debit
Tech: Uses PayPal Technology
QuickBooks.Intuit.com: If you are using QuickBooks for your agency accounting system then using QuickBooks Pay is easy and quite effective. You can accept all major credit cards over the phone, in person or on your website. It is easy to use and is fully integrated with your QB accounting system.
Cost: Free to QuickBook users.
Fees: Competitive with others. Just depends on processing.
Tech: Free card reader, website technology, everything you need
Apple Pay Cash: If you have an iPhone you probably already have Apple Pay Cash. It was included with the iOS 11.2 update. All you have to do is set up Apple Pay Cash with your credit or debit card and you can start paying and receiving money. It is that easy. The only catch is that your client must also have an iPhone enabled with Apple Pay Cash.
Cost: Free to Set Up
Fees: 3% credit, debit Free
Tech: N/A
Pay.Amazon.com: While this option is more for online stores than processing service fees and such, we included it because consumers are so used to buying online at amazon.com and the check out process using Pay is exactly the same. However, this is much better suited if you are selling products on a website.
Cost: Free to open an account
Fees: 2.9% + $.30 per transaction
Tech: You will need a developer with your shopping cart program
Square Cash: Square Cash is unique because your don’t actually have to set up an account and it only works with credit or debit cards. To request cash, email the person that owes the service fee, enter how much is owed in the subject field, and then CC the email to request@square.com. Once the email is received, both parties will need to enter their banking information, and the transfer will go through.
Cost: Free
Fees: 3% credit and debit
Tech: N/A
There are dozens more settlement programs out there, but these should easily meet your needs. But, in case they don’t here are more to consider.
WePay.com
2CheckOut.com
Leaders Merchant Services
Authorize.net
Skrill
CreditCardProcessing.com
ProPay
FirstData
BrainTree
Flagship
Stripe
ProMerchant
Dwolla
Payment Cloud
Payoneer
TransferWise
Epag
Shopify Payments
Pauline
CardConnect
WorldPay
Merchant Inc
FastSpring
Just Google “Sites Like PayPal” for many more.
A Brief History of Settlement in the Travel Industry
Just for fun here is how settlement looked back in the late 1960s and 1970s for the most part clients paid in either cash or check when purchasing airline tickets and other travel products. All airlines were paid through (the then) ATC Area Settlement Plan, which is now the ARC Area Settlement Plan. Each and every Tuesday every travel agent accounted for every transaction processed through the Area Settlement Plan and submitted an “Agency Sales Report” to the Area Settlement Bank in their area.
The Area Settlement Bank would then reconcile the thousands of Agency Sales Report that they processed and distributed the funds to the various airlines that airline tickets and other accountable documents were written against. All in all, it was a mind boggling process as the numbers were huge and all of the world’s different currencies had to be considered during the process.
The plain fact is that travel agents existed to first document the sale by confirming airline space with the “Agency Desk” at the airline being sold and also settling the transaction through the Area Settlement Plan. At the time, if a consumer wanted to purchase an airline ticket from the airline the only way they could do it was by going to the airline’s ticket counter at the airport, or visiting one of the airline’s “City Ticket Offices”.
Fast forward to the late 1970s credit cards became more available and were more frequently used for travel transactions. The Airline Deregulation Act of 1981 pretty much changed the entire process and allowed freedom for the airlines to do pretty much what they wanted. By the end of the 1980s technology was changing the industry like never before. Satellite communications enabling properties world wide to sell directly to consumers, e-tickets and direct settlement eliminated the reason that travel agents were in existence and led the way to the commission caps of the 1990s and subsequent termination of airline commissions altogether. Travel agents were still dependent upon the Area Settlement Plan for processing payments to airlines, tour companies and such. And, then came along PayPal and the industry saw myriad changes.