‘Uber for X’s hype in the tech world has not hindered the gig economy from taking its space in today’s travel industry.
Gig economy is a general term for the web-based freelance workforce that we’ve seen growing alarmingly over the past years. While some of the transformations are colossal, for example, what Uber’s X has done to the taxi industry, most are small improvements inspired by new-age innovations. The same is true for OTAs (online travel agencies) which must now re-examine their payout processes due to the emergence of the ‘Uber for tour guides’ and the ‘Uber for hotels’ platforms.
A spotlight on traditional online travel tools
The majority of web-based booking tools fall into two categories:
- Online travel agency (OTA)
- Fare aggregator
Online travel agencies consolidate the trip booking and planning process on the same online setting much like the regular travel agencies. They often market themselves to tourists of a specific demographic, or who would like to tour a common destination.
Fare aggregators offer more services than OTAs. They organize all travel resources including air transport, accommodation, as well as car rental services, sometimes even liaising with OTAs. In case a fare aggregator’s traveler wishes to book an OTA listing, the agency issue the aggregator with a referral fee and meet the client request.
The two platforms began taking payments through wire transfers, then shifted to virtual credit cards which allows tour service providers to add into their merchant terminal and process in 48 hours or less—a significant step up from the days of wire. Virtual cards also came with extra security as each is designed for specific persons.
But because virtual cards have their drawbacks; service providers need to design a distinctive card for each transfer (which then complicates the payment process), and there’s no guarantee once you send a payment. These cards also charge merchant processing as well as foreign exchange fees which is a burden online travel merchant account owners and fare aggregators have to carry. And now the gig economy is rising to meet the travel industry’s needs amid the need for better payout options.
The gig economy’s contribution
Online travel markets like GetYourGide, Airbnb, and Headout, have surfaced to bridge the gap, and they rely on individuals and micro-businesses worldwide to fulfill the services they promise clients on their platforms.
These new marketplaces which make a bigger part of the gig economy work to strengthen the bond between service providers and clients in the industry: instead of paying to a tour company or hotel chain, marketplaces send payments to a larger number of small vendors worldwide. And because independent vendors care more about the processing and foreign exchange charges, there arises the need for cheaper, faster and safer ways to take earnings.
Thanks to the rapid innovation in the gig economy, e-wallets are speeding up things in the travel sector. And a joint research work by analysts from Hyperwallet and PYMNTS.com, known as the Gig Economy Index indicates 90% of contractors and freelancers are willing to work if payments are made faster and safer.
Author Bio: Electronic payments expert Blair Thomas co-founded eMerchantBroker, serving both low and high-risk business including travel merchant account holders. His passions include producing music, and traveling.