Q&A: What Travel Professionals Need to Know About Virtual Payments for 2024

This sponsored content was created in collaboration with a Skift partner.

Virtual payments solve numerous challenges for leisure travel agents, online travel agencies (OTAs), and travel management companies (TMCs) — from facilitating seamless payment interactions across different currencies and cross-border costs to providing payment transparency and fraud prevention.

For travel agents and agencies, maximizing revenue amid today’s increasingly connected — and competitive — virtual payments landscape requires reach, flexibility, and extensive access to various partnerships, banks, and card schemes. For travel management companies, virtual payments can also help customers enforce travel programs and policies.

To better understand the contours of today’s virtual payments landscape, SkiftX recently sat down with two executives from Sabre Virtual Payments: Nicolas Ortiz, Head of Product and Partnerships, and Patricio Boccardo, Global Commercial Head.

SkiftX: When people outside the travel industry ask what you do, how do you describe your job?

Nicolas Ortiz: When I explain what I do at a high level, I use the example of a travel agency selling you a package — let’s say $3,000 to go to a Caribbean island. Behind the scenes, the travel agency that charges your credit card needs to pay $1,500 to the airline, $1,000 to the hotel, and then the rest is their margin. I help optimize those payments between the travel agency and the provider.

Patricio Boccardo: Nicolas, as the head of poroducts and partnerships, leads the teams that build out this entire payment value proposition, and my team is responsible for ensuring that travel agencies across the world have the chance to experience our solution.

SkiftX: What are the primary challenges associated with business-to-business leisure and corporate travel payments for travel agents, OTAs, and TMCs?

Ortiz: The industry is so segmented that there are many ways to pay providers — some will only receive credit cards while others want bank transfers — and managing this complexity can be challenging. Travel agents need a way to handle 15 different ways of working, while constantly reconciling in different currencies. This requires a strong technical and operational solution that can not only manage this complexity but also optimize revenue while doing it.

Boccardo: When travel agencies have one, two, or three providers, they must maintain multiple APIs and do multiple reconciliations. Negotiating with everyone simultaneously is overwhelming, so that’s where our support comes in. At Sabre, since every company is different, we combine our technology solution and our premium banking offer with tailored consultancy advice to ensure they’re not leaving money on the table.

SkiftX: How should leisure travel agents and OTAs be thinking about payments to maximize revenue and build new revenue streams?

Ortiz: They need to be thinking globally about how they collect their money. They can add margin to their sales by understanding the full scope of their payment flow. Depending on the sale, the scenario, and their working capital situation, they might choose one form of payment over another — say, a prepaid card that helps them set cost limits, or a virtual card from an issuer in a foreign country because it helps them reduce currency exchange costs. Maintaining a global perspective on payment flow is critical to defining a successful payment strategy.

Boccardo: Remember, payments heavily impact the customer experience. If the payment fails, it could generate a disruption in the booking flow, a delay in ticket issuance, and the loss of a tariff that was going to be paid — hence, the ticket becomes more expensive for the customer. Online travel agencies operating at scale can build new revenue streams by staying one step ahead of these potential failure points.

SkiftX: How can travel management companies use virtual payments to optimize customer payments?

Ortiz: Having a virtual card with set spending parameters and budget limits gives travel management companies more control, especially in cases where they pay in advance to book corporate customers, basically acting as the merchant of record for that transaction. This is a much more streamlined process than sending a bank transfer to pay hotel properties and billing settlement plans (BSPs), and it helps prevent fraud.

Boccardo: Digitizing the payment flow creates a better experience for travel management companies and travelers alike while unlocking a new revenue stream.

Most travel management companies still view payments as an operational service to be provided to their clients. Only a few of them are thinking strategically about how payments can work for them as a revenue stream, especially when they need to pay their suppliers — so we come in and help open their eyes to that possibility.

SkiftX: Can you share a few examples of the tailored consultancy advice that Sabre Virtual Payments offers its clients?

Boccardo: Well, that is like asking for Coca-Cola’s secret formula. Seriously though, when we work as an advisor, we go through a company’s books and look at how all of their payouts work — rebates with their existing bank, currencies to be paid, expansion plans, lines of credit, and other various payment terms and arrangements — and with everything on the table, we can customize a solution that helps them unlock extra rebates, avoid unnecessary charges, and increase revenue.

By funnelling all of their payments through our platform, we can consolidate the various reports from all of the different banks and issuers into one cohesive template and give them a full and consistent business review of their payment flows every three months.

SkiftX: What new payment innovations are on the horizon?

Ortiz: One of the biggest trends we’re seeing is the consumerization of business-to-business travel payments, which is about making business-to-business payments as convenient, seamless, and personalized as business-to-customer payments and automating as much as possible. The relatively manual payment process still common with business-to-business payments will give way to a much more automated customer experience akin to Uber or Airbnb.

The other big trend is the rapid advancement and adoption of artificial intelligence (AI). In the travel payments ecosystem, we’re going to continue to see AI applied toward automating tasks, improving forecasts, and fine-tuning control for travel management companies.

To learn more about what Sabre Virtual Payments can do for your business, click here.

This content was created collaboratively by Sabre and Skift’s branded content studio, SkiftX.