Globally, B2B travel transaction volumes are projected to reach $1.7trillion by 2027 with the APAC region in the lead as the fastest-growing market expected to reach $480billion in the same year. However, research from payments processor, Thredd has revealed that 60 per cent of online travel agencies are struggling to find qualified payments partners to help them capitalise on potential growth.
The opportunity is ripe for payments players who can solve common payments challenges. However, OTAs need help from their payments partners. According to the Thredd report, there are five main ways that payment innovation can be improved to help the travel sector:
- Improving customer experience
- Reducing costs
- Improving cashflow
- Reducing risk
- Greater transparency
Thredd interviewed several clients as part of the report including leading cross border and travel payments businesses, Nium and Caxton.
Spencer Hanlon, global head of travel payments at Nium, stated: “In this age of innovation, travel payment processes remain stuck in the past. Online travel agents and intermediaries demand flexible, secure, and cost-effective ways to pay and get paid.”
Modern solutions
The report highlights how many businesses are introducing modern solutions such as virtual cards to reduce fraud and other issues highlighted in the report including traceability and speed.
Alana Parsons, chief operating officer at Caxton, commented: “A good payment solution should not only facilitate transactions but also contribute to process efficiency, enhance the customer experience, and help manage costs effectively. Look for a partner with thorough knowledge of the travel industry and the ability to customise solutions to your specific requirements.”
The report also showcases how partnerships can benefit OTAs. Thredd notes that key criteria for selecting a travel payments partner involves looking at a firm’s experience. Looking at past, present and longstanding clients is a must to understand how a partner functions.
Furthermore, a partner should bring other names to the table. The report reveals that a partner should combine efforts with others in order to create a better offering, as it is increasingly unfeasible for one provider to do everything.
Identifying how a partner designates requirements, roles and responsibilities is also key in understanding if they will be a good fit for an OTA. This is in addition to risk and fraud management, vision and a post-launch strategy.
Capitalising on a growing customer base
When further considering opportunities to serve the travel sector the payments industry is increasingly looking at the corporate expenses experience, with the market expected to grow at a CAGR of 11.5 per cent through 2028. For payments businesses who can deliver more efficient and transparent processes there is a growing customer base as more personnel return to travel and businesses in emerging markets expand.
Jim McCarthy, CEO of Thredd said: “One important impact of the technological advances in the travel industry is the emergence of new players – many of which we are proud to support – that are helping travel providers streamline the myriad systems, players, standards and options at play within the payments ecosystem, particularly with the growth of country-specific financial regulation.”
