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Blockchain: How Digital Currencies will affect Business Travel

In the last few years, seemingly from nowhere, Bitcoin has made its way firmly into public consciousness. Even if you don’t trade in this digital currency, you’ll surely be aware of it as it seeps into mainstream business operations. While the very idea of a digital currency was initially met with scepticism, today the trend is growing rapidly, affecting transactions in a number of sectors. It’s surely only a matter of time before it firmly takes its place in the travel industry as well.


Simply put, Blockchain is the technology underlying Bitcoin. One advantage of Bitcoin transactions is that they are anonymous, and so must be encrypted. To achieve this, Bitcoin’s founder Satoshi Nakamoto came up with the idea of a digital ledger or database in which transactions are recorded, processed and linked securely. No-one can access the ledger beyond specified persons or a network of stakeholders, thereby preserving their anonymity.

This system, which came to be known as blockchain, works as follows: every time a transaction takes place it is configured into a ‘block’ containing the details of the buyer, the seller and the transaction. The value if the sale is then deducted from the buyer’s digital bank balance and shared with the network. This new block is then added to the chain of transactions that preceded it, and recorded in the central, digital ledger, ready for the next transaction.


As well as being anonymous, Bitcoin is also decentralised, meaning that it is not controlled by any particular country or bank, and can therefore be used internationally. Naysayers will no doubt point out that this makes Bitcoin easier to use fraudulently, a fact that has been the source of much of its negative publicity.

Although Bitcoin is the best known, there are other digital currencies in use across the travel industry. One such example is Special Drawing Rights (SDR), a reserve asset introduced by the International Monetary Fund in 1969 to make up for a shortfall in foreign exchange reserve assets including the US dollar. SDR is often used to draw down compensation paid by airlines for damage to baggage, injury or death.

Neutral Units of Construction (NUC) is a private currency used by airlines. In order to record airfares, a regularly-updated list of exchange rates is issued by the International Air Transport Association (IATA). These rates are then used to convert ticket prices from their original currency, usually the local currency in the country where the plane takes off, to the currency required by the ticket buyer. Up until 2013, a similar method was used by the International Union of Railways to record rail ticket prices, using a virtual currency known as the UIC Franc.

Although there no evidence to suggest that Bitcoin and other virtual currencies will one day entirely replace world currency as we know it, there are some hotels and airlines that currently accept Bitcoin as payment.


When making a transaction through blockchain, purchasers do not need to hold digital currency.

Instead, depending on whether it is a private or public blockchain, digital currency acts as a token within the process to ensure secure and instant transmission of the payment through the network.

While there are several applications of blockchain in business travel, it is early days, and the technology is relatively new. The most likely area of growth is using blockchain to simplify the overly complicated global commercial payments process.

While blockchain does not remove the need for a credit card, by reducing the number of stages and parties involved in global payment, costs can be cut, cashflow improved and fraud eliminated. Blockchain technology could also allow hotel bills to be settled instantly because systems will automatically know which amenities have been used.

Another likely use for blockchain is for the verification of credit card numbers being sent to hotels, supporting rather than replacing virtual cards. The need to pay for overseas purchases in local currencies, and the cost of currency conversion and overseas transaction fees, would then disappear.

Unsurprisingly, credit card companies are keen to protect their position in the supply chain. MasterCard now offers customers the ability to send money over a blockchain rather than by swiping their credit card. IBM already processes payments over its own blockchain system between banks in the South Pacific.


Other potential applications of blockchain include ‘smart’ contracting, which effectively removes the middleman from a transaction. If a contract threshold is achieved, the contract automatically adjusts itself and payments are made as soon as transaction data is received. Block Geeks compares smart contracting technology to a vending machine due to the fact that you essentially “drop a bitcoin into the vending machine (i.e. ledger), and your escrow, driver’s license drops into your account.” Blockchain could also help to link the transactions between airlines, travel management companies (TMCs) and their corporate clients. A ledger would record and verify tickets sold by the airline, pay the client’s fees to the TMC and pay the TMC’s fares to the airline, all in one go.

In reality, blockchain will not have much effect on travel managers other than smoothening their systems. For passengers though, if IBM succeeds in creating verified identification of individuals through their smart phones, passing through passport control will be a much quicker process, without the need to have your ID continually checked. The theory is that if the system knows who you are, you don’t need to carry a passport. Instead, a digital passport would reduce the risk of identity fraud and information being lost or stolen. Last June the Dubai government partnered with UK start-up ObjectTech to bring blockchain-based security to Dubai Airport by combining biometric verification and blockchain technology, and using a “pre-approved and entirely digitized passport” to authorize passengers' entrance into the country.

Should other airports follow Dubai’s lead, immigration departments would not be able to access passenger’s personal details, but would see confirmation that their details have been verified and matched to the confirmation using facial recognition or other biometrics.


There’s a degree of excitement as well as hesitation around blockchain, which is being heralded as either the salvation or the death knell of the relationship between TMCs and their clients. Only time will tell which potential business applications will catch on.

Here at Flight Centre Business Travel, we feel that the main impact of blockchain will be its streamlining effect on digital payments, which will be made automatically without input from the traveller, while payments involving currency conversions will have more transparency. Payments for transactions between suppliers, TMCs and their clients will be slicker too.

In the long term, the low cost digital payments enabled by blockchain could replace corporate and even virtual cards – but we don’t see that happening any time yet.