Virtual cards have become the main means to ensuring seamless, automated and secure travel supplier payments.
With both consumer and corporate travel bookings moving increasingly online and at an ever faster pace, virtual cards are adapting accordingly, offering travel businesses efficient, scalable and secure reconciliation of payments around the world.
The way card payments work today is not the same as ten or even five years ago. While using the same physical card networks, virtual cards are a different proposition, able to be embedded into core systems via API, highly customisable to a variety of use cases and offering rich supporting data that aids both payment reconciliation and business planning.
When leveraged fully, these integrations can save Online Travel Agents (OTAs), travel sellers and other suppliers time, trouble and cost, whether that’s in authorisations, payment tracking and reconciliation or even funding.
With almost limitless volumes of tailorable cards able to be automatically created, managed and reported on via services such as Modulr, virtual cards can be a flexible payment method that actually reduces risk across the payment chain.
So what’s new? Let's dive into how virtual cards are evolving today:
In this blog, we’ll be looking at:
The majority of travel bookings are initiated by card payments, whether made directly with hotels, care rental firms or other end businesses, or via OTAs taking payment from the traveller up front and creating secondary virtual cards to pay the constituent suppliers.
The reason is simple: cards offer unparalleled convenience, security and global acceptance.
Virtual cards offer instant authorisation and immediate trust, thanks to well-established card networks with both global reach and the peace of mind that comes with chargeback protection.
From single-use and multi-use card creation to streamlined reconciliation using custom data fields to manage card payments at scale, virtual cards today are both well-established and highly adaptable tools. As a result, it’s likely that they will remain the priority method for travel supplier payments for some time to come.
Modulr is a principal issuer of both VISA and Mastercard, working on virtual card solutions with businesses automatically creating thousands of virtual cards via Modulr’s API every month.
OTAs are seeking to manage their liquidity in the most efficient manner, especially when done at scale. However, virtual cards can actually help control the timings of payments to suppliers precisely, making cashflow far less of a worry.
For instance, Modulr's virtual cards allow OTAs to optimize cash flow with payments to suppliers – in a range of currencies. If the authorisation window is controlled to authorise payments only to the date of a hotel guest’s check-out, for example, that prevents funds being processed at the time of booking.
Another benefit is around the funding accounts behind virtual cards. Modulr is a regulated provider authorised to issue accounts and cards in multiple currencies. By having the cards tightly coupled with the underlying accounts on the same platform, the OTA only needs to deposit, directly with Modulr, the amount of funds equivalent to the value of cards due to be authorised at any point in time.
When corporate credit cards are held on file to pay travel suppliers they are susceptible to misuse. That’s not the case with specific, single-use cards, as that risk is reduced where a virtual card is integrated into the booking system and created with spend controls that link it directly to a specific booking.
As single-use virtual cards are created for particular transactions and authorisation windows that control when the card can be used, once the payment is made, the card is effectively deactivated, so no longer vulnerable to misuse.
Modulr is working with increasing numbers of OTAs who are rapidly scaling their operations. Instead of issuing individual virtual cards via an online portal to book flights or hotels ad hoc, they are building and integrating APIs to issue cards automatically and embed seamlessly into middle office booking platforms.
It is not uncommon for hotels now to specifically request virtual card use when receiving bookings from OTAs, thanks to the benefits they offer during payment reconciliation.
Declined card payments expose OTAs and other agents to price and FX fluctuations as well as lost bookings. Similarly, the local currencies of suppliers can pose costly FX challenges for both parties if purchasing cards are from a different region to the supplier. To tackle issues like these, Modulr can issue cards from multiple BINS in a variety of local currencies, to reduce FX costs at the local level and streamline acceptance for suppliers.
Virtual cards are transforming the way travel payments are handled, offering businesses across the travel sector an efficient, secure, and flexible payment method.
To find out more about Modulr’s virtual card solutions get in touch with one of Modulr’s travel payment experts now.