Interview with Martijn Hovinga, chief executive officer,...

Interview with Martijn Hovinga, chief executive officer, BilltoBill
China Special: By EyeforTravel.com Correspondent

It is being acknowledged that the most important element to support the e-platform... (9/1/2006)


It is being acknowledged that the most important element to support the e-platform in China is related to the international credit card user base in China.

But Martijn Hovinga, chief executive officer, BilltoBill feels the situation is more complicated than that.

“For the merchant addressing Chinese travelers, accepting Chinese debit cards is still considerably more cost-effective than international credit cards. Furthermore there are so many more debit cards on issue. Not accepting debit cards in China is a ‘non-issue’,” he says. The debit cards are the most important payment method for outbound, according to him.

Recently, BilltoBill Limited, a wholly-owned subsidiary of Australian online payments solutions provider Oriel Communications Limited, signed a Memorandum of Understanding with China Southern Airlines Company Limited. The company says it is the first online payment company to become an online payment partner to a Chinese airline for its international business. For the company the development follows the recent signing of Singapore Airlines routes into China.

Hovinga, who was recently in Beijing for EyeforTravel’s Travel Distribution China 2006 conference spoke to Ritesh Gupta about the payment methods. Excerpts:

Can you throw some light on current status of payment methods in China?

In business to consumer (B2C) cash is still dominant. Major online travel agencies such as Ctrip and eLong still have most of their transactions paid through cash on delivery. For online authorisation, debit cards (over 800 million on issue) are very important, much more so than credit cards. Chinese consumers need to authenticate themselves by entering their PIN when using debit cards (also online). Bank transfers (both online and offline) also play a major role. In person to person (p2p) payments many alternatives exist for small payments such as Alipay and PayPal (limited to transaction within China only). In the online role playing industry, prepaid cards are used. However there is no single dominant prepaid card and the commissions are very high.

Last year it was shared that providing alternative payment options as credit cards are still not widely used. How are things currently shaping up?

BilltoBill supports debit cards, credit cards, telephone payments and bank transfers.

Is cash still predominant as a payment method in the China market? If yes, is there any major change in the offing in near future?

My opinion is that cash slowly but steadily will loose ground. Now it still makes sense to send somebody on a bike to deliver a voucher and collect the cash (given the low labor cost) but as business grows this is not scalable and also subject to increased risk, such as robbery of the bikers.

For a company like BilltoBill, how would you assess the progress made by your company in China? How have differentiated your operations?

We focus on companies headquartered outside of China that wish to do business in China and companies in China that wish to do international e-commerce, since we combine the best of the East and the best of the West. In the process we also signed up a number of merchants based in China doing business in China only.

An industry professional shared that there is a concern related to bad debt or penalty for cancellation of travel document including hotel voucher of air ticket after issuance. What’s your viewpoint on this?

I think the industry professional refers to reservations that are not paid upfront which is the majority. The occurrence of ‘no-show’ in China indeed seems to be higher. This even more so highlight the case for (down-) payment in advance. Because of user authentication through PIN with Chinese debit card, the risk will be very limited.