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Internet transaction processor PayPal Inc. will handle settlement of payments between travel agents and hotels, car-rental agencies, and other non-airline travel suppliers as part of a single-source, electronic booking portal offered by a San Francisco-based startup company. The deal helps PayPal further its strategy of moving more payments outside the online auction market and gives One Link 4 Travel Inc., founded three years ago in the U.K., a transaction infrastructure for its international expansion. One Link is rolling out its online system this spring in the U.S. and Canada after having begun operations in the U.K. and Ireland. It projects it will handle $100 million in travel payments worldwide this year and $500 million in 2006, with PayPal trafficking about 90% of that volume. The other 10% will be retained as commission by travel agents. One Link plans to sign up some 40,000 travel agencies in North America, or about 30% or all agencies in the market, over the next 36 months, says Bill Guerin, a technology entrepreneur recruited to serve as chief executive. Currently, a dozen car-rental firms and about 60,000 hotel properties, One Link's initial market, are using the system overseas, either directly or through One Link's connection to electronic reservations giant Sabre Holdings. The service is free to agents, while travel suppliers pay One Link a fee for each booking. Guerin says his company fills a void for agents, who historically have had a single-source electronic system for all airline bookings and payment processing but not for hotel, car-rental, entertainment, and other non-airline bookings. He argues his system will be particularly appealing to agents who are migrating to vacationers, a market he says is less competitive than business travel. “The margins [in leisure travel] are still good,” he says. One Link relies on prepaid travel plans in which travelers pay agents in advance for travel packages. The agents deposit the funds into PayPal accounts. One Link issues instructions to PayPal to pay travel suppliers out of the accounts, less commissions ranging from 8% to 10%, and pays PayPal's transaction fee. All agents and travel suppliers in One Link's network are required to open PayPal accounts. Guerin won't reveal the rates One Link negotiated with PayPal, but hints the processor, a unit of online auction giant eBay Inc., didn't deviate much from its published fee schedule. “They're in a pretty strong position,” he says. “Let's just say they didn't need to give much latitude.” One Link decided on PayPal, Guerin says, because of its brand recognition and international payment capabilities, which will become even more important as the company continues its expansion. “They can support us in 45 countries with the same processor,” he says. While the company is initially focusing on hotels and car-rental agencies, Guerin says he expects One Link's system will soon appeal as well to discount airlines and, on the agency side, to online travel sites such as Orbitz and Expedia. The online travel agencies, he says, could benefit from moving to One Link's prepaid system, though they would still rely heavily on card-not-present payments from travelers. Card payments can create complications in paying travel suppliers when chargebacks pop up. “By the end of the year we expect to be having serious conversations with one or two of them,” Guerin says.
