Virtual card payments are helping OTAs and travel management companies to fulfil their promise of offering customers the best service and prices while protecting their cash flow, according to Wex.
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TTE 2016: Employ virtual card payments to protect ‘under fire’ cash flow, says Wex
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Virtual card payments are helping OTAs and travel management companies to fulfil their promise of offering customers the best service and prices while protecting their cash flow, according to Wex.
The global payments solutions provider provides single use card numbers that can be used to pay suppliers, backed by credit to ensure payments processes are optimised and meaning agents can move away from corporate credit cards that can be susceptible to fraud and can incur additional costs.
Lee Jackson, Wex head of travel Europe, said it was virtual cards that have allowed OTAs to start offering low deposit deals to secure early bookings as tour operators have traditionally done direct and through their retail partners.
OTAs selling holidays including low-cost carriers have to pay upfront and under Atol regulations must also protect all client cash in a trust fund, so have previously been unable to offer low deposit deals.
“The customer wants to be able to secure their holiday now, but at low-cost. Therefore the OTA has to take on risk in funding that air fare and clearly there’s an impact on cash flow.
“As far as payments strategy is concerned adopting virtual cards as a means by which you operate that low deposit then you cover the exposure in terms of cash flow.”
Firms can also select what type of virtual card to use meaning they can always offer their customers the cheapest price, for instance by opting for a debit card to avoid the higher credit card fees.
For TMCs facing the imminent change in Iata rules for paying airlines, virtual card payments can help to protect cash flow which is “under fire” added Jackson.
Another advantage of virtual cards Jackson said is making it possible for agents to move to distribute dynamic rates from hoteliers rather than traditional fixed contracted rates that add to the administrative burden and are often not the best prices available in the market.
