Travel was highly impacted as an industry during the pandemic, suffering a staggering loss of $4.5 trillion in 2020. After getting somewhat back on track, there was further disruption when the Omicron variant restarted the whole process of travel restrictions again.
With the uncertainty of global events like COVID-19 still being felt, new digital payment strategies future-proofed against constantly shifting times are needed. Data shows that the average hit to travel agency profit margin from avoidable payment-related costs such as time devoted to reconciling invoices is up to 20%.
Meanwhile, it’s been estimated that travel agents gain a 25% improvement to profit margins when switching to virtual cards. The switch to virtual cards provides cost savings and peace of mind due to the lowered risk of fraud from security measures.
Progressive online travel agents (OTAs) who are ahead of this change are moving toward payment systems that are intuitive, automated, and cost-reducing compared to slow-moving legacy systems. Virtual travel cards are a key component of this shift; they have all the characteristics of a physical card but are generated electronically.
By focusing on travel payments through automation, virtual cards remove manual reconciliation, giving both time and control back to finance managers and improving business performance.
Three key advantages of virtual cards for OTAs
The travel industry has been keen to adopt virtual cards into its infrastructure. With 94% of travel agents, 90% of hotels, and 86% of airlines agreed that virtual cards would become an essential payment method.
- Eliminate overspending and manage budgets. With a virtual card, it’s straightforward for a business to set spend limits, specify usage, and determine the vendor before a card is issued ¬– allowing finance managers complete control of how expenses are distributed and monitored. Additionally, once the vendor is paid, the card can be automatically cancelled to ensure that no one can get a hold of the card number, reuse it, or have the invoice paid at a higher amount than what was set.
- Eliminate manual reconciliation. With everything being electronic, charges can be monitored in real-time and automatically embedded into an ERP or bookkeeping system. Expenses can also be tracked in real-time, reducing the chance of fraud or card misuse.
- End-to-end safety. Security is a key component of the virtual card – it was estimated that fraud reached highs of $25.6B in losses in 2020. Virtual cards can be created via web portals and APIs, providing control over expiry dates and authorized amounts. By offering a limited window of use for a single card, it avoids the risk of card details being misused when handed over to a merchant on a business trip.
The Nium virtual card also auto-freeze after the first transaction, whereby the card gets deleted after processing. All these features combined to make virtual cards the safest way to pay.
Create a global payment network for travel
In a post-pandemic world, partnering with a global payments provider avoids ambiguity in the way finances are managed. Nium’s virtual card solution brings a new streamlined approach to travel payments for a corporate clientele, combining unrivaled control, visibility, and efficiency.
The Nium platform allows you to manage cards, spend limits, and more in a single dashboard. Proving that in an unstable climate, you can rely on virtual cards to innovate and give peace of mind when processing online travel payments in over 33 countries including: the EU, SGP, UK, Australia, and Hong Kong.
Talk to a Nium expert today and learn more about transforming travel through payments.