2014 looks set to be a good year for Online Travel Agents. After a shaky few years, many economies are beginning to pick up, leading to an increase in travel spending habits. The WTM Global Trends Report 2013 paints a positive picture, estimating global online travel to grow steadily at 9.5% CAGR over the next five years.
This is all welcome news for OTAs, no doubt, but an increase in business will lead to a greater strain on back office resources. In recent years improving infrastructure may not have been priority number one, and indeed technology spend at many organisations has been capped or cut back in real terms. But with revenues now on the up, there has never been a more opportune time to update those existing legacy systems.
Now of course we would say this, but implementing an efficient and low cost payments system will be critical for OTAs to improve profitability. Unlike a lot of technology projects, businesses can very accurately predict cost savings with payments overhauls as well as other tangible benefits.
According to a recent PhoCusWright report Payments Unsettled, many travel agencies do not know the costs or do not think there are costs to making B2B payments to suppliers. Let us tell you, there are substantial costs in sending payments via credit cards which continue to be the dominant means of making travel payments. These costs can have a serious impact on the profit margins of OTAs.
When it comes to making payments, what OTAs are most concerned about are card fees and fraud. Fraud in particular is the number one payments concern, especially amongst larger OTAs (i.e. those generating over $100m in revenue p/a). Fraud rates are much higher in those regions where credit card bookings are more common. In fact, OTAs reported that 1.5% of total bookings were fraudulent. These numbers are unacceptable.
A payments infrastructure based on virtual prepaid cards can alleviate these payments pain points for OTAs. With our easy to implement Payment Partner solution, OTAs create a single-use virtual card for every purchase. This provides an extra layer of protection by eliminating the need for financial directors to share corporate card details with employees. Because the cards are single use, they bypass the anti-fraud mechanisms associated with the repeated use of a credit card.
Payment Partner also allows OTAs to generate the types of card which avoid high fees from certain suppliers. Crucially, with Ixaris, OTAs can turn their payments systems into an additional source of revenue. As an OTA, you will typically execute high volumes of transactions which send money flowing through banks and other financial institutions. With Ixaris, OTAs can share in the profits of these transactions by accessing custom rebate programmes that meet transaction quotas.
Travel firms like Multicom, Bravofly, Logitravel, Ecotour.com, Club Travel and Voxel Group already use Ixaris virtual prepaid cards to optimise their payments processes. Get in touch if you’d like to find out what we can do for you.