01Expensive cross-border payments:
Globalization has led to all kinds of enterprises trading across borders, more frequently. Since OTA suppliers and customers are spread across the globe, they require reliable and cost-eﬀective cross-border payments for global trade.
Besides, there are other risks and costs involved, such as ﬂuctuating forex rates, transaction charges, long settlement times, the ever-present threat of fraud, geopolitical uncertainties, and regulatory requirements. Consequently, along with risk and fraud management, OTAs need to provide a broad range of payment modes and manage multiple currencies. Note that virtual cards and airline settlement plans are cost-eﬀicient options whereas plastic cards and bank transfers incur higher transaction charges.
With the rise of digitalization across the globe, cross-border payments are improving. Virtual cards and mobile payments are crucial trends fuelling this growth. Virtual cards promise low risk, versatility, and easy integration through APIs. In fact, recent Juniper Research data reveals virtual cards will reach $6.8 trillion in global transaction value in 2026. This positive prediction points to the growing need for the adoption of such innovative & cost-eﬀective payment modes.
02Payment fraud risks:
Ineﬀicient payment mechanisms can be the most vulnerable to fraud. Besides hurting proﬁt margins immediately, fraud can hamper the reputation of a company/individual, impacting their ability to attract and retain customers.
As per IBM, the second-most targeted industries for cybercriminals are travel and transportation. As intermediaries, OTAs can be especially susceptible to such crimes and have their reputations tarnished most easily, as emphasized in 2021 by Ryanair.
With card-not-present transactions growing, fraud remains a core concern when receiving payments or paying suppliers. Therefore, choosing payment partners with secure platforms and an array of safe payment mechanisms has never been more critical for OTAs. While virtual cards can safeguard OTAs in this regard, debit and credit cards are riskier than bank transfers or airline settlement plans.
Cross-border payments are complex. Together with chargebacks and reversals, multiple payment means, and payment providers, it becomes costly and time-consuming to process transactions. Problems can be compounded when errors occur, making one liable to overlook fraudulent transactions, particularly if there is weak control and poor transparency. However, virtual cards can help transform this present scenario by eliminating manual processes and fraud, thereby making reconciliation seamless.
04Challenging dispute and reimbursement process:
In any business, payment disputes are not uncommon. Therefore, contested online transactions and the resulting chargebacks are prevalent. As for airline settlement plans, their dispute redressal and refund process are tilted heavily in favour of the airlines. With card payments, however, chargebacks provide a reliable dispute process while virtual cards oﬀer the additional advantage of stronger fraud protection.
For all businesses, especially those in the travel segment, stable cash ﬂows are vital. Given the slim proﬁt margins, the diﬀerence between a struggling or thriving business is decided by liquidity. The pandemic has further emphasized the signiﬁcance of positive cash ﬂows and cash reserves. To enhance the duration of funds being held in their accounts, OTAs must have a vibrant payment strategy. Cards are a worthwhile alternative since they increase the period during which agents can retain customers’ funds till they settle the card company’s dues. Here, virtual cards work best because they sustain liquidity. Agents can customize transaction dates whereby money remains in their account for a longer duration between the time of payment by the customer and the period when money has to be sent to the supplier or merchant.
In this context, as a global platform providing cross-border and multichannel payments, TerraPay can increase the eﬀiciency of payments for any OTA. While payment fees are reduced, the convenience, transparency, and speed of payments are improved wherever OTAs operate.
We do this by:
Reducing foreign exchange and transaction fees for international payments
Speeding up money collection locally, converting it to the required currency, and undertaking bank transfers in real-time as well as making real-time, same-day payments across the world
Enabling global expansion by managing payment needs in new geographies as the business grows