The confidence of both travellers and their employers to return to travel depends on proactively managing the degree of acceptable risk and demonstrably reassuring individuals
Our industry has suffered from inertia, and we’re often guilty of failing to challenge established processes. We have carried on doing things the way they’ve always been done because, with consistent growth, there just hasn’t been an impetus for change. Bill-back is a prime example of this phenomenon. It works and has yielded incremental revenue for TMCs as a value-added service, so why rock the boat? But the global shock to our industry caused by the Covid-19 pandemic means people are now challenging these established norms.
In an era where cash flow is critical to business survival, it just isn’t sensible to operate settlement schemes like bill-back that take 30 days or more to apportion payment. As a TMC, imagine having a conversation with your CFO where you try to defend the practice of using what little free cash flow you might have as a line of credit to corporate customers for bill-back.
Even if the CFO is on your side and your TMC has a stronger balance sheet than most, the risk of providing credit in this environment might simply be too high. On the one hand, pressure from hotels to settle rapidly will only intensify and on the other it’s unlikely you’ll find willing providers of credit insurance. Savvy TMCs have always insured against the risk of bill-back default, should a corporate be unable to pay its debts. Securing such insurance at reasonable rates is likely to become increasingly difficult as the wider economic shock takes hold.
Another adversary to the bill-back operation will be the requirement for immediate payment settlement as hotels start to reopen. All accommodation providers’ bottom lines are being hit hard by the pandemic and they are faced with the challenges of adapting to a post-lockdown reality. It will no longer be attractive to provision the large volumes of concessionary credit terms to the TMCs that made bill-back possible in the past.
So how are hotel payments likely to shift? Well, there’s going to be significant demand for payment methods that have near real-time settlement such as bank-to-bank payments and virtual cards. Both have their place and it might be that where a large TMC has a trusted relationship with a hotel chain, which has already centralized payments, they can implement a bespoke bank-to-bank arrangement.
Virtual cards can be used by TMCs as well as by corporate customers who are making hotel bookings. They can prepay or choose settlement to be completed automatically at check out, ensuring optimum cashflow throughout the supply chain. In most cases, the TMC is going to want the added benefit of automated payment reconciliation of individual payment transactions, which reduces administration time and room for error, ultimately saving more money.
More broadly in today’s environment there’s a push for a touchless travel experience and hotels are no exception. Data from Nordic payment processor Nets showed that contactless payments in the region grew their share of card transactions by 12 percent, reaching 69 percent share, in the first four months of the year. That’s more than twice the growth experienced in the same period of 2019. Advances in technology have enabled virtual commercial cards placed in mobile e-wallets. This means the business traveler can tap-to-pay anywhere contactless Apple Pay or Google Pay are accepted, and the funds are taken directly from the corporate’s own bank account.
While most hotels still have work to do in order to accept these new touchless methods, mobile virtual payments can offer the same smooth experience as bill-back, just without the multiple invoices, painstaking reconciliation and expensive 30-day settlement happening behind the scenes.
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About Conferma Pay
Conferma Pay is a global financial technology company. We design and integrate virtual payment systems that provides a more efficient, seamless and secure way to pay for for businesses.
Travel Meets Payment
Conferma Pay was born in Manchester in 2005. Since then we have connected over 700 TMCs, and directly integrate with all the major GDSs and OBTs. Our roots lie in corporate travel payment integration.
We enable our payment providers to flow virtual cards into the preferred purchasing process of any business travel buyer. Crucial to this is our network of banking partners, who have issued virtual cards in over 200 countries, in 40 currencies with over 45 commercial banking partners via all major card networks.
Our ecosystem continues to expand to meet the growing requirements of our global customer base.