This pandemic has affected many areas of industries. Among that, the travel has been hit the hardest. The crash in international tourism due to this pandemic could cause a loss of more than $4 trillion to the global GDP for the years 2020 and 2021. This was according to a recent UNCTAD report. Now as the global vaccination rates are climbing, the international travel is cautiously beginning to reopen. The travel industry is on their way to recovery. Many new processes have been introduced because of the pandemic. And in that, the digital transformation is the key, particularly when it comes to payments strategies.
Online travel agents were the pioneers of e-commerce. They sold and booked travel experiences for customers. It is estimated that as much as 20 per cent of travel agency profit margins are lost, due to some process such as reconciling invoices with payment statements. Travel agents can no longer afford payment inefficiency. Travel has long been in a low-margin sector. And this pandemic has made it even tighter. Nowadays, virtual cards are gaining traction as a new and improved way to make B2B travel payments. It is highly automated and offer complete control and remove the need for manual reconciliation. Bank transfers from the agent’s account to the supplier’s, are very costly, particularly in international payments. As the agents are dependent on the currencies and card, they are typically inflexible, and offer limited transaction data. This makes it an administrative challenge to reconcile statements against supplier invoices.
As a part of an optimized payments strategy, the virtual cards can be embraced. This enables agents to take advantage of a highly automated service. They can also have a complete control. Virtual card reporting can also be uploaded directly into the back office. The estimated improvement to profit margins for travel agents switching to virtual cards is 25 per cent. Travel agents are adapting to meet the new post-COVID reality. They are well preparing for the resurgence in global travel. Airline settlement processes failed majorly in the early days of the pandemic. On a daily basis they need to face the cancellation of flights, and so, reconciliation and refunds became extremely difficult. Customer expectations have changed in today’s complicated world of travel. A winning B2B travel payments strategy can make some difference in the market in the upcoming months.