Travel TechnologyVirtual credit cards protect travel businesses from the risk of mass cancellations during unforeseen circumstances: Nium.

Opinion: What's the future of virtual credit cards in travel payments?

It's time to accept new forms of payment if travel companies want to safeguard themselves against mass cancellation nightmares.
It's time to accept new forms of payment if travel companies want to safeguard themselves against mass cancellation nightmares. Photo Credit: Adobe Stock/Fabio Principe
Spencer Hanlon
Spencer Hanlon

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Many APAC outbound tour operators and travel agents are exposing themselves to unnecessary cancellation risks through outdated payment processes, warns Spencer Hanlon, head of travel for financial technology provider Nium.

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 refunds.

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.

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