The last three years have revealed the resilience and need
for travel companies to evolve from the antiquated processes that have hindered
their capabilities to expand. More importantly, it has exposed the need to
implement a payment strategy that will leverage revenue diversification.
We have all learned throughout this period that the travel
industry has been forced to transform and innovate. Even though the pandemic
impacted the industry severely, it also acted as a springboard for ideation
with a twist of survival skills. That in turn fueled many sectors of the
industry to unfold a trajectory that expanded beyond their current offering and
process.
All verticals of travel have been challenged to inherently
build a strategy that will support their travel business for the future. Travel
post-COVID looks very different today with the heavy increase of international
travel and personalized experiences. In addition, there are generational trends
that continue to drive the industry to think outside the box at a rapid
pace.
This combination can
add further complexity to online travel agencies and other verticals of travel
if not prepared. Travel companies’ payment strategies need to include a global
outlook in order to stay relevant in the expanding trends of the industry.
The continued
economic growth in the emerging markets and the past hurdles the markets have
presented will prompt the evolution of a global payments strategy, which will
act as the guiding path for all markets globally. Developing an enriched
payment platform will allow the core of the business to reap the benefits and
add a seamless experience for the end traveler.
The fear of going beyond borders is still real, due to the
complex banking process, high cost and heightened regulations, which continue
to make companies hesitant to power ahead their expansion.
Emerging markets
Today a selected
group of payment providers that specialize in the emerging markets, who have
worked on developing direct connections with the exotic critical markets, will
expedite the expansion time to market. In addition, it will immediately provide
a payment solution for customers and vendors while reducing cost, which in turn
will generate revenues that will drive growth and foster operational
robustness.
The result will be
magnified by all ends of the business, which will provide travel companies with
a direct understanding of their customers’ needs. A suite of payment products needs to be in
place to act as the driving force of the payment ecosystem, coupled with
enhanced technology including fraud prevention and chargeback mitigation.
The perception of the money movement will change as a
prosperous payment strategy will be embedded as a key part of the business. The
movement is already here, which also includes vital partnerships to encourage
an expedited inclusive global payment readiness. Transformation is inevitable,
the global payment providers are responsible for pushing a fast-track approach
that continues to shift the payment expectations to offer a seamless global
money movement, all while reducing transaction costs and accelerating real time
payments.
Uplifting the thinning profit margins is also an area that
travel companies are heavily focused on as the expansion must make monetary
sense – that continues to add the high importance of products to generate
income from various streams, while optimizing payment strategies. Products such
as virtual cards are still the preferred payment solution due to competitive
rebate schemes and versatility.
However, the industry is ready to explore all viable payment
solutions that will provide not only profitability but also a seamless process.
Expanding virtual cards to the rest of the world continues to be at the
forefront for most travel providers in conjunction with payment options that
will facilitate the process when virtual credit card acceptance is nonexistent. In addition, suppliers are also leveraging B2B payouts to monetize further opportunities.
Examples include:
- Local tourist guides who are providing personal experiences
globally who travel companies would like to add to their portfolio of travel
offering. - The rise of alternative accommodations, or the so-called
single property owners.
These independent providers will be keen to partner with
travel companies if their funds can be settled instantly into their bank
account or mobile wallet.
Virtual card trends
The forecasts of worldwide virtual card transactions soaring
in the billions continue to unfold. It’s more important than ever to develop a
key payment strategy for the future. Ideally, a healthy mix of solutions like
B2B payouts, virtual credit cards and a card-to-account model should be
included. This will leverage the industry to propel it to new heights.
The time to expand to
crucial, exotic markets is here. Recent trends show that the shift to long-haul
flights continues to increase since 2022, and there is no sign of a slowdown.
With such high demand for international travel, the rise of global expansion
and cross-border payment strategies within OTAs, travel companies and the
hospitality sector has become very relevant.
The online space continues to rapidly gain market share.
This, in addition to a high increase in smartphone app adaptability, will allow
OTAs to organically drive their global growth.
Trends continue to reflect that APAC continues to make
strides in the OTA market expansion, followed by Western Europe, Eastern
Europe, North America, South America, the Middle East and Africa.
Digital payment strategies and expansion continue to
accelerate in the industry, along with the demand for international flights and
online travel providers, digital wallets and digital cards. It’s vital that
businesses within the travel industry seek and adopt digital payment strategies
to achieve continuous growth. The industry needs to continue to push forward
with innovative technologies and optimize from the traditionally rigid
settlement schemes that are hindering the efficiency of payments between most
sectors of the industry.
The industry continues to search for innovative ways to move
money on demand without succumbing to high cross-border fees. From a
time-to-market perspective, securing direct banking rails can delay a company’s
deliverables. But these payment rails are crucial, especially for the “rest of
the world” where most payment providers don’t have a direct presence or
visibility.
The solution for many businesses is to choose a global
payment provider that provides B2B payouts with direct banking capabilities, as
well as a diversified card strategy that further leverages travel companies to
remain fluid in the payment process. This will result in opening access to
emerging markets, reducing processing fees and providing higher card
acceptance, which can overall lessen the overall financial impact and increase
profitability.
According
to PwC, the emerging markets are home to 85% of the global population.
India and China’s 2.5 billion people alone represent more than a third of the
world’s population, making even modest market developments in fast growing
economies extremely significant. Customer expectations are driving a
significant change in the payments industry in these countries.
The value of partnerships
It’s no secret that one of the growing concerns for travel
providers wishing to expand to the rest of the world is finding the right
payment partner – one who can support their expansion while reducing the
traditionally high cross-border fees that weigh down business profit
margins.
Banks have
traditionally had the upper hand in this situation and are looked at as the
“natural owners” when it came to international transactions. The world of
payments has been revolutionized by emerging payment companies that bring
agility, innovation, efficiency and a less expensive way to move money on
demand. Of course, this brings along the growing concerns of alleviating the
scrutiny of compliance, regulatory requirements and technical infrastructure.
We continue to hear
that regulatory measures are expected to continuously grow as the digital
payment space expands. Partnering with a trusted and tested global payment
provider that has developed a rich standardized compliance process and direct
banking relationship will leverage a frictionless experience.
The travel industry is not shy when it comes to complexities, and adding a payments path heightens additional concerns. The travel industry
is by far the most challenging payment vertical, because it touches such a wide
range of sectors and experiences volatile complications and disruptions.
Let’s not forget the dinosaur in the room, which is the
providers evolving their reservation or PMS systems. Since a large majority of
travel providers own and manage their own IT systems, many of them hesitate
over launching IT projects of such a high magnitude. This exemplifies why so
many of these providers are stalling when it comes to evolving their payment
strategies – optimizing away from the antiquated systems that are already in
use comes at a significant expense. Without a commitment to optimize their
back-office technologies, the payments transformation will be inhibited.
Focusing on the right payment strategy will allow travel
companies and providers to further expand their capabilities in emerging
markets and fast-track their growth. Statistics show that the high rebound in
travel is expected to continue.
TerraPay’s virtual card solution can offer up to 66
currencies and global issuance with a focus on emerging markets. This will
allow all travel sectors to seamlessly move money in real-time globally without
the added cost of third parties or aggregators.
Learn more!
the company can simplify complex regulatory compliance while connecting your
business to our global payments network.
