The complex distribution chain of the travel industry and the current cancellation and credit policies have contributed to creating scenarios in which the non-payment risk is increasing. In a context of the volatility of the market, exploring new strategies to mitigate the risk of non-payment has become one of the main challenges the travel industry is facing. 

Thereby, the last session of the baVel Digital Summit was focused on the study of the non-payment risk contexts derived from the COVID-19 crisis. The session was held last Wednesday, October 21, and was attended by key players in the sector such as Mastercard, Ixaris, Hotelbeds and Ingenico Payments.

Lack of credit in the market

During the session, the panellists agreed that due to the coronavirus crisis, insurance companies have eliminated the availability of credit in the industry and the risk has increased dramatically.

This caused hotels and travel agencies to redefine their payment terms with the distribution chain: “We are seeing a movement towards charging at the time of booking due to lack of credit, and not as it had been until now at the time of check-out or even months later ”, stated Xavier Ginesta, President of Voxel Group.

In this line, Alex Rodriguez, Lead Product Manager at Hotelbeds, providing a bedbank point of view, one of the intermediaries between hotels and OTAs, highlighted the importance of synchronizing and redefining the payment flows of the industry using technology and innovation.

80% of attendants have experienced difficulties in obtaining credit for their main clients or in maintaining credit terms with their suppliers

Credit cards and pre-paid refundable rates

Facing this situation, the travel industry is opting for pre-paid refundable rates model, where virtual credit cards stand out as the most common and secure form of payment method.

Along these lines, Tiago Coimbra, Head of Hotel Payments at Ixaris, agreed on the increasing use of virtual cards in the industry. According to Ana Arjones, Travel industries Enterprise Partnerships Manager at Mastercard, credit cards offer payment protection once the charge is authorized. “If a pre-paid refundable rate is paid with a credit card at the time of booking, even if it is cancelled or the hotel goes out of business, the client’s refund is guaranteed, as long as the cancellation policies are met,” said Arjones.

More than 75% of attendees have increased the use of VCCs since the start of the pandemic.

On the other hand, after adopting a project that involves the massive use of virtual credit cards, Hotelbeds highlighted the high cost and some operational problems, such as fraud, lack of consistency in payment conditions and compliance with the requirements of invoicing, such as the main limitations of the VCCs.

The Payment Manager: innovation in B2B payments

To try to find a solution, HEDNA and HTNG, with the collaboration of Voxel Group, are leading the Open Payment Alliance (OPA), the new B2B payment standard for the travel industry that aims to address the existing limitations.

The Payment Manager, main OPA’s tool, allows the creation of a single specialized payment channel for the industry, decoupling the payment flow from the booking. The OPA technology aims to address the existing inefficiencies of the B2B payment channel and, furthermore, help rebuild trust between actors thanks to the traceability, automation and optimization of all processes related to payment.

More than 85% of attendees believed that in a period of 5 years Payment Managers will be as popular as Channel Managers in the market.

The event had more than 100 live viewers. You can watch it again here:

Remember that the last session of the baVel Digital Summit “Payment Manager Early Adopters Program” will review the keys of the Open Payment Alliance’s technology. Save your spot: