Ypsilon partners with BitPay, providing bitcoin payments to over 80,000 travel sites

Luke Parker, 19 Jan 2016 - Adoption, Bitcoin, Travel

Ypsilon.Net AG was originally founded in 1994 by Hans Joachim Klenz, who still leads the company as President and CEO. At the core of the company's growing suite of tools lies the development of modular internet booking engines, and web based technology solutions, merging content from different sources.

“Our goal is to provide our customers with a fully integrated turnkey solution to meet their specific needs at a competitive price.“ - Ypsilon.Net AG

The company is now a global provider of internet travel technology, providing solutions for fare management, booking engines, low-cost carrier content, hotel and car engines, ticketing robots, mid- and back-office systems, tour-operator modules, fraud prevention systems and payment solutions.

With offices in Germany, the United Kingdom, and Poland, the company claims more than 5,000 clients, and over 80,000 travel sites around the world use their e-commerce solutions, with 80% of travel sites in Germany relying on their service.

The company recently announced a new partnership with BitPay, one of the world’s leading bitcoin payment processors, with offices in the US, Canada, Europe, and South America. Bitpay has raised over US$32 million in investments from Index Ventures, Founders Fund, and Sir Richard Branson, to name a few.

Having already integrated the Bitpay payment gateway API, Ypsilon customers around the world can now activate bitcoin payments on their sites.

“We are very excited about the partnership with Ypsilon.Net, as it enables us to scale bitcoin payments with one of the most innovative technology platforms in the travel industry. Thousands of online travel agencies world-wide can now benefit from a secure, cheap, and global payment solution.” - Marcel Roelants, General Manager at BitPay in Europe.

Industry players have been investigating the benefits that bitcoin and the blockchain can bring to their bottom line for quite some time. Ypsilon’s long time partner and a leading global distribution system and IT Solutions provider, Amadeus, commissioned an airline industry report last year, to investigate opportunities for airlines to streamline costs.

The report, written by Frost & Sullivan, found that while bitcoin can help as a payment solution, the blockchain can also offer savings. “It is essentially a single, extremely secure, transparent global ledger. The network, rather than a third party, validates a transaction. This means that friction (and cost) can be reduced across the network,” the report reads.

Amadeus is one of Ypsilon’s largest partners, boasting a growing global market share in airline distribution of 40.7% in 2014. The company reported processing 526 million bookings and boarding 695 million passengers that year. Other large partners include Sabre, Travelport, and FareLogix, to name a few.

While the blockchain may help reduce costs in the long term, BitPay marketing associate James Walpole states that accepting bitcoin payments instantly eliminates chargeback fraud, as well as traditional card processing fees. Payment fraud in particular is a major problem for the travel industry.

“It is estimated that credit card fraud represents between 1% and 2% of an airline’s revenue in the indirect channel. This presents a $2.4 – 4.8 billion dollar problem for airlines.” - Amadeus

Visa Europe's figures from 2013 show an overall fraud rate of 4.5 basis points, or €0.045 in per €100, but levels of fraud differ according to the channel in which the transaction occurs, and also the merchant sector. As a whole, the airline industry does not compare well with other merchants operating in the Travel & Entertainment sectors.

At the very best performing airlines, Visa reports fraud rates of less than six basis points, but the rates tend to be much higher for most airlines. “At two of Europe’s ‘flag carrying’ airlines, we have recently seen fraud rates in excess of 60 basis points – which is around 13 times higher than the Visa overall average,” states the company.

fraud value

A 2014 e-commerce fraud trend report, from EMC Corporation, shows that the average online purchase in the airline industry is US$659, but an average fraudulent purchase is US$1,480.

An airline industry fraud management report commissioned by CyberSource in 2014, and conducted by PhoCusWright Inc., shows that the most common step to prevent fraud is to simply cancel the booking. Nearly nine out of ten airlines reject bookings upon detection of potential fraud. The overall percentage of bookings that are rejected or cancelled due to suspicion of fraud is 3.4 percent on average, but exceeds five percent for smaller airlines with revenue below US$1 billion annually.

fraud action

All of the fraud prevention measures can cause trauma to legitimate customers. Not only do these ‘false positives’ result in heavy loss of revenue for the airlines, but at the same time, it represents aggravation and dissatisfaction for customers, which can hurt the whole industry if they decide to just stay home.