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 reflectsthe 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.