Excerpt from PhocusWire
Last year was a record one for the cryptocurrency market, which surged past $3 trillion in value for a brief period in November 2021. Bitcoin in particular made headlines in February of last year when it hit $1 trillion in market value – igniting debate about whether cryptocurrency would catch on as an accepted form of payment in travel.
Today, as the market contends with inflation, Bitcoin’s price has fallen to less than $20,000 as of Monday, and experts expect ups and downs to continue.
Travel providers that accept cryptocurrency say they’re experiencing a similar fluctuation - when the price of Bitcoin, or other cryptocurrencies, goes up, so does business – but that’s not uncommon, says CheapAir’s Jeff Klee.
“[Sales made with cryptocurrency] do historically ebb and flow with the price of Bitcoin,” says the co-founder and CEO of the online travel agency, which began accepting Bitcoin in 2013.
“Right now, for instance, it’s definitely come down a few notches, and we would expect it to go back up. It’s not a perfect science by any means, but … if the price of crypto goes up by 10%, our crypto business goes up by about 5%. It tends to be about half, and vice versa: If [crypto price] goes down by 10%, the business goes down by about 5%.”
Latvian airline airBaltic, which claimed to be the first airline to accept Bitcoin in 2014, has noted a similar trend: “Currently, the market is in a correction stage, and it is also visible in our recent booking statistics,” says Artūrs Garais, Web3 project lead at airBaltic.
“Currently, we see a trend of more people preferring to hold onto their cryptocurrencies rather than spend them to fly.”
Comparatively, in September of last year, the carrier reported that during the third quarter of 2021, the number of bookings paid with cryptocurrencies increased by 44% over the same period in 2020.
“With the current market situation, [crypto] payments are not very popular at the moment,” Garais continues.
“However, we have been in these cycles before and have recovered. The situation currently is slightly different due to the overall financial situation, but as it is more than currency, we believe that in the long term, there should be a recovery and growth.”
Digital dilemma
Market volatility aside, there are other barriers to widespread adoption of cryptocurrency payments in travel.
For one, in developed countries, “credit card companies have a pretty strong stranglehold on financing and how people pay,” says Klee. “If you’re a consumer, you like the fact that you get points. You like the fact that you can call and cancel a charge.”
Of course, consumers are paying for credit card services, “but nobody realizes how much they’re paying for that,” he says.
“That’s what’s really great about digital currency - it eliminates a lot of those costs. But because people don’t realize they’re paying those costs, they don’t see the value in cryptocurrency.”
For travel providers, allowing customers to pay in cryptocurrency comes with its own set of technological challenges. Many hotels, for example, still struggle to accept credit card payment over the internet, says James Montague, Shiji Group senior director of security and integrations.
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