A growing requirement from hoteliers for upfront payments is fuelling the use of virtual payment cards, the annual Travolution Summit was told yesterday.
Supplier demand for pre-payments fuelling rise in virtual cards
A growing requirement from hoteliers for upfront payments is fuelling the use of virtual payment cards, the annual Travolution Summit was told yesterday.
Delivering one of the event’s three ‘Data Take Out’ sessions, Jason Hancock, head of channel development at eNett International, said the trend was underlined by a survey the company had carried out, which found that a significant number of hoteliers predicted pre-payments would grow a lot or a little.
“There is a desire for better managing of inventory and yields, increasing cashflow and better management of risk,” Hancock said.
“It also has benefits on the retail side because it gives retailers the ability to get access to dynamic rate content, like last-minute deals, on a pre-paid basis.
“The second is retailers wanting to deal more direct with suppliers. Legacy settlement models such as BSP are really presenting barriers to entry for agencies wanting to deal direct.
“There is an opportunity for suppliers to reduce their costs by cutting out the middle man. Also retailers get a better deal by dealing direct with the travel suppliers.”
Virtual payment cards, or VANS, can also protect against fraud – 40% of respondents to the survey sited this as a payment challenge.
The payment method can also guard against internal fraud, as strict permissions can be included on the use of cards limiting the amount of money and stipulating which suppliers can be paid.
There are safeguards in place to ensure suppliers are unable to charge the wrong amount from the agency, and virtual cards also protect agency money in the event of a supplier going bust.
“Between 2000 and 2010, 96 airlines went out of business. There are significant risks agencies are taking on board when they are settling in cash.
“The ability for companies to get that money back is a big problem.”
