At the end of last year, Forbes Magazine noted that, “Just as Amazon changed the way we shop and Apple reinvented the music biz, digital disruption is going to soon affect every aspect of your money: how you earn it, save it, invest it and spend it.”
In travel, we see similar disruption in the way travel agencies are paying suppliers. Historically, this money flow has been managed – to the satisfaction of most – by IATA’s Billing and Settlement Plan (BSP). However, the growth of air content outside of the BSP – such as low cost carriers like easyJet and Ryanair – and the increasing reliance of travel agencies on non-air content for their revenues, has driven travel professionals to look for alternatives.
The rise of the virtual card
Starting around 2000, virtual cards were developed as a way for consumers to enjoy peace of mind when buying products on the internet – safely. When you wanted to pay for something you would go to a virtual card issuer where you could generate a prepaid card for the single purchase you were about to make. Now that e-commerce is ubiquitous, most people are comfortable using their own credit cards on the internet and shopping in their pyjamas. But that didn’t spell the end of the virtual debit card. Far from it.
Since then, virtual card providers and their use in the travel industry has been increasing: today, around 20% of agencies claim to use virtual cards.
Key benefits that appeal to travel sellers
Travel agents like using virtual cards for a number of reasons that vary due to the size and shape of their respective business. But the following benefits have wide appeal across leisure and business travel companies:
- Ease payment for providers outside IATA’s BSP: Low Cost Carriers, hotels, car rentals, and other travel content.
- Facilitate the reconciliation of sales: Virtual cards have a unique identifier for each transaction so reconciling sales against spend is faster and easier than alternative methods which rely on laborious manual effort and are time-consuming.
- Reduce fraud risk: Travel agencies can put strict controls on the use of virtual cards with specific spending limits. Besides, it ends the practice of sharing a card and passing it around the office, thus reducing the risk of card details ending up in the wrong hands. With virtual cards, the spend limit is restricted to the amount you load on the card and not to the credit limit set by the bank.
- Protect travel agencies: with traditional methods of payment, like bank transfer, when a travel agent pays a supplier and that supplier goes bankrupt, the travel agent is left holding the baby. With Virtual Card payments, the major card schemes, like MasterCard®, protect travel agencies in this case, in the same way as they would for consumer payments.
What’s different about Amadeus B2B Wallet?
Amadeus first launched a virtual credit card in 2014, in partnership with AirPlus. Earlier this year, in February, it augmented the credit card offer with Amadeus B2B Wallet Prepaid. This prepaid solution comprises two virtual cards linked to the same account. One card earns travel agencies a rebate on the amount spent, and the other helps avoid payment card surcharges applied by some travel providers. Both options are fully integrated with the travel agent’s professional selling interface, so payments can be made while booking a trip.
Combined with the credit offering Amadeus now offers a full suite of virtual card products.
Amadeus’ payment solutions are also available via Amadeus Web Services. So third party and in-house developers can incorporate the benefits into their own travel seller applications. Interest in the new solution is high and demand is expected to grow throughout 2016.
Earn, save or borrow – the choice is yours
A key difference between Amadeus B2B Wallet and some other providers is its increased flexibility. Having the choice to earn, save or borrow cash when paying for travel content is now a reality thanks to Amadeus’ portfolio of virtual cards – and this, ultimately, equips travel agencies with the right card option for every type of purchase.
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This article first appeared in the TTI Newsletter May 2016