Spencer Hanlon is the head of travel for financial technology provider
Nium, a global business payments platform that simplifies expansion and
streamlines payments for businesses.
As the world continues to navigate the Covid-19 pandemic and its
aftermath, the travel industry remains at risk of mass cancellations.
Many APAC outbound tour operators and travel agents are exposing
themselves to unnecessary cancellation risks through outdated payment
processes, warns Spencer Hanlon, head of travel for financial technology
During the height of the pandemic, many travel companies saw monthly
cancellation rates well above 100%, causing an existential crisis for
the industry as a whole. The difficulty of processing refunds only added
to the short-term crisis, with many companies struggling to cope with
the financial burden.
In the event of another Covid wave or any other catastrophic event,
such as a virus outbreak, freak weather conditions, or geopolitical
unrest, any tour operator or travel agent paying their travel suppliers
via bank transfers would have an exceptionally difficult time getting
Even refundable bookings may not be refunded, and if they are, it
could take weeks or even months. Non-refundable bookings would be even
harder to get back, with some companies still deep in legal action
resulting from the March 2020 cancellations and it is possible they may
never see that money again.
However, there is a solution to manage or avoid this risk: virtual
credit cards. B2B virtual cards protect travel companies and make it
significantly easier to claim a refund in the event of a mass
cancellation. This means that APAC tour operators and travel agents
could have their money back in their accounts in a matter of days,
rather than years.
Virtual cards also make the operational side of a mass-cancellation
scenario a lot easier to handle by automating the reconciliation
process. From a day-to-day business perspective, virtual cards offer
many benefits over traditional payment methods. They offer controls that
traditional cards or bank transfers don’t, allow for much quicker
payments, and are significantly cheaper too.
According to Spencer Hanlon, modern virtual cards offer the travel
industry a similar level of technology and service that consumers have
come to expect in the 2023 world.
Meanwhile, traditional bank transfer payment methods are stuck on
1970s legacy technology. It is time for the travel industry to embrace
new payment technologies to avoid the risk of mass cancellations causing
financial and operational nightmares.