November 3, 2016
When it comes to B2B payments in the travel industry, traditional payment channels have been challenged by innovative alternative payment methods. But how much impact have they had? New research by Phocuswright on payments in the European travel industry shows that things are changing - and when it comes to Virtual Cards or Virtual Account Numbers (VANs) the momentum for change is faster than ever.
The last time Phocuswright carried out a payments study was in 2013. Three years is a long time in technology, so in partnership with Phocuswright we wanted to find out how much innovative technologies like virtual card had disrupted the industry. We weren’t disappointed. The research outlined a definite shift away from traditional payment methods by the travel industry, with Virtual Card the biggest beneficiary. Support for VANs has more than doubled, from 26% in 2013 to 55% in 2016 representing a huge step-change in adoption. In fact, the research showed support for VANs amongst larger agencies has already overtaken traditional methods, with 71% supporting VANs, compared with EFT (62%), cash (52%) and cheque (42%). And when it comes to paying hotels and accommodation, travel companies of all sizes cited VANs as the most popular method of payment (24%), second only to traditional credit cards. Is this the sign of things to come?
Three years ago, the Phocuswright report deemed VANs and virtual card technologies outside of the ‘conventional’. Today VANs have firmly established themselves as part of the new normal for agencies and suppliers alike. More and more travel companies are realising the cost and efficiency benefits alternative methods can bring, all by simply changing the way you pay. I believe in the 2019 study we will see VANs overtake EFT and cheque overall when it comes to preferred payment methods, with cheques driven close to extinction. As for the rest of the world, there’s still work to do in terms of educating and supporting the global industry to realise the full benefits of alternative payment options. But change will come. VANs have reached their tipping point, and B2B travel payments are one step closer to truly frictionless payments.