TTE Preview: Ixaris claims OTA payment processes can threaten profitability

Ixaris, a provider of B2B payment solutions, has looked into the spending profiles of five medium-sized OTAs.

Ixaris, a provider of B2B payment solutions, has looked into the spending profiles of five medium-sized OTAs.

Their data shows that an average OTA could be spending between £40,000 and £165,000 every year, just on payment-related costs.

Ixaris claims that at the upper end of that scale, these costs can account for as much as 20% of an OTA’s gross profit.

These costs were spread across surcharges, FOREX and reconciliation, with surcharges levied by low-cost carriers accounting for the biggest slice of payment-related costs.

FOREX charges added an average 2% (the same as low-cost carrier surcharges) onto the cost of paying an international supplier. The overall cost was less, as these fees only affect around 20% of the transactions.

The highest reconciliation costs were felt by OTAs processing multiple supplier orders with a single high limit credit card, without an automatic matching facility.

The report says that losing a percentage of every sale due to an inefficient payments process is a threat to their long-term profitability.

Alex Mifsud, co-founder and chief executive of Ixaris, said: “We’re calling on any OTA, even those who feel that they’ve got this issue locked down, to look again at their spend profile. We’re seeing a huge drain on OTA margins, even though the issues behind that drain can be tackled.”

Ixaris will also be speaking about their findings at Travel Technology Europe, on the Innovate stage at 1:30pm on 25 February.