We all learned from the pandemic that diversification in the travel industry is crucial to success.
It came in as a force of nature that unraveled traditional industry processes.
It opened the doors to many new possibilities. Most of all, it heightened the
need to generate income from various streams, while optimizing payment
strategies.
The travel industry continues to face the pressure of
turning around a profit. Which spiraled the continued popularity of virtual
cards due to competitive rebate schemes and versatility. The industry is keen
on pushing forward on exploring 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.
With forecasts
of worldwide virtual card
transactions soaring in the billions,
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 has increased 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 online travel agencies, 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.
The market
research report by Absolute Reports reflects the global OTA market size was valued at
$50.8 billion in 2022 and is expected to expand a CAGR of 11.07% during the
forecast period, reaching $95.3 billion by 2028.
Digital payment strategies and market 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 traditional 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 being forced to use 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.
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 for cross-border markets 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 elephant – or maybe in this
case dinosaur - in the room, which is 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.