End-to-end payment systems for travel companies: How they work
Juggling multiple banks and accounts, maybe a Foreign Exchange (FX) service, a payment gateway, a payment processor for card payments, choosing local payment methods, and throwing in a spend management platform for good measure, is no finance team’s idea of a good time. Yet, it’s often the norm for travel companies simply trying to pay and get paid.
It tends to happen organically. Starting out, you rely on your bank for most money matters. As you grow and begin to process high volumes of international payments in multiple currencies, the charges imposed by your bank for card payments and cross-border transactions start to spiral. You also expand into new markets, requiring you to integrate with numerous local payment methods and establish partnerships. Customers expect to pay in their local currency and preferred payment methods, and without these options, they may abandon their purchases, impacting checkout conversion rates.
To solve these issues, you add multiple tools to your finance tech-stack, as and when the problems arise. You’re left with a payments patchwork quilt held together by complicated manual processes that are slowing you down and costing you money.
An end-to-end payment system can solve all of this complexity. They consolidate payments, FX, and spend management into one streamlined platform, helping travel companies simplify operations, reduce costs and enhance the customer experience.
What are end-to-end payment systems?
If you’re using a traditional bank plus multiple providers for other finance functions, an end-to-end payment system might sound too good to be true. They provide all of the key functions that travel businesses need to accept multi-currency payments in local payment methods, settle funds and manage payouts to international networks of vendors, within a single system.
How end-to-end payments systems work
For the travel industry, an end-to-end payment system simplifies payment acceptance, allowing businesses to show customers rates in their local currency and lock FX rates for fixed periods. It also enables companies to settle funds using multi-currency wallets and supports streamlined payouts to vendors, all within a single system. These platforms empower travel businesses to scale globally.
In the majority of cases, legacy payment infrastructure has been cobbled together over time, whereas modern end-to-end systems have been built with the intention of providing users with a single platform to perform all key finance functions. By streamlining the entire fund flow lifecycle, travel companies gain real-time visibility into their cash flow by eliminating data silos, manual reconciliation processes, and hidden fees. This means less time spent managing disparate payment or financial operations systems and more time focussing on growth – a key priority for travel businesses looking to compete with industry giants.
The payment challenges faced by travel companies (and helpful solutions)
Due to the international nature of your business, payments can be a real operational headache that can impact your bottom line.You need to accept payments in multiple currencies and payment methods, and pay out suppliers across various countries and currencies. This complexity leads to high volumes of international transfers, exposure to FX volatility, and increased transaction fees. Additionally, the travel industry tends to face high degrees of chargebacks and fraud, adding another layer of difficulty. In a recent report co-authored by Airwallex and Skift, we found that nearly two-thirds of executives had challenges with their payment systems that were hurting their profit margins. Here are some of the key financial operational challenges travel businesses are facing, and guidance on how to overcome them.
Problem: Managing multiple payment providers
46 percent of executives said they manage four to six different payment providers. Each system has its own systems and requirements, adding layers of complexity to financial management, increasing administrative burden and the chance of errors.
Solution
Consolidate all of your payment functions into one unified platform. As Shannon Scott, Senior Vice President and Global Head of Product at Airwallex explains, “With Airwallex, there’s no need to set up local entities or work with multiple banks as we provide direct connections to local banks and card schemes across the world, and have 60+ regulatory licences and permits globally. We provide all the necessary financial infrastructure out of the box.”
Problem: High cross-border transaction costs
67 percent of executives agreed that cross-border payments have become more complicated due to the volatility of FX rates. Your bank makes a lot of money from cross-border transactions from companies who aren’t aware of the alternatives. Cross-border transactions often come with high fees and poor exchange rates. These costs can significantly impact your bottom line.
Solution
An end-to-end payments platform can reduce these costs by offering better FX rates and lower transaction fees. Airwallex provides market-leading FX rates that are 1-3 percent better than traditional banks.
Travel Expert, a travel conglomerate listed on the Hong Kong Exchange, recently benefited from the switch to Airwallex. It now saves up to 3 percent in currency exchange every time it needs to pay overseas hotels and accommodations. They reinvest these savings into business development, expediting their global expansion.
Problem: Inefficient reconciliation
70 percent of executives agreed that they lose “significant” amounts of time reconciling financial information across countries and markets. Reconciling payments from multiple sources is error-prone, requiring manual entry and adjustments, increasing the risk of discrepancies and financial mismanagement.
Solution
With all of your financial data in a single platform, detailed transaction data will be at your fingertips for effortless financial reconciliation between customer booking and supplier and vendor payments. You’ll also benefit from automated reconciliation, so reporting errors will become a thing of the past.
Problem: Security and compliance
66 percent of executives strongly or somewhat agree that their company has seen an increase in fraudulent payment activity in the past 2-3 years. This rise in fraudulent activity poses a significant risk to businesses in the travel industry, where high transaction volumes and diverse payment methods are common.
Solution
Airwallex offers real-time fraud protection. The system uses machine learning, trained on millions of transactions, to conduct real-time scans on every card payment to detect and prevent fraudulent transactions. This customisable system helps travel companies effectively manage and mitigate fraud risk, enhancing overall security and customer trust.
For more advice on how to solve payments challenges, read the 2024 State of Payments in the Travel Industry by Skift and Airwallex. We spoke to travel industry finance leaders about the challenges they’re facing in their global financial management, and how they’re modernising their financial infrastructure to help fuel their global ambitions.
How end-to-end payment systems help travel companies succeed
Such is the frustration felt by executives at travel companies with the inefficiency of their current payments and financial operation set-up, 80 percent of them said they would be interested in an all-in-one platform. Their inclinations seem well placed.
End-to-end payment systems help travel companies expand and succeed globally. They support global expansion by enabling businesses to let their customers pay the way they want, greatly enhancing their experience and boosting conversion rates. With Airwallex, you can accept payments from 180+ countries via 160+ payment methods.
Operational efficiency and cost reduction are built-in benefits. These platforms streamline reconciliation processes by consolidating all financial data into one interface, reducing manual errors and saving time. Airwallex’s platform processes over 90 percent of transactions through local rails, ensuring that approximately 85 percent of funds arrive within a few hours or the same day, with around 50 percent being instant. This efficiency not only enhances productivity but also cuts down on cross-border transaction costs. By consolidating payment functions into a single platform, end-to-end systems can give you a genuine competitive edge. By replacing your current set-up with Airwallex, you’ll be ready to scale effortlessly, while future-proofing your fintech stack.
Travel Expert is the perfect example of this. Their integration of online payment processing expanded their clientele by offering a fast and secure checkout experience in more than 25 countries. And their finance team uses Airwallex’s Borderless Cards to create multi-currency virtual cards for different departments, streamlining supplier payments and enhancing productivity.
Your next destination: Airwallex
A modern payment and financial operations infrastructure is business critical for staying competitive in an increasingly digital and borderless travel industry. Every day, Airwallex helps travel companies like Authentic Vacations, We Ski, Camplify, and Travel Expert accelerate their global expansion, through simplified payment acceptance and streamlined supplier and vendor payouts. With Airwallex’s end-to-end payment system you can:
Collect payments globally by offering local customer payment methods and building optimised checkout experiences.
Maintain multi-currency accounts to accept and pay out funds easily and cost-effectively while meeting regulatory requirements across regions.
Automate and enhance financial reconciliation and reporting.
Manage your FX exposure and costs with access to market-leading FX rates no matter the transaction size.
Future-proof your fintech stack to enable accelerated growth and new revenue opportunities.
See how Airwallex can help your travel business. Sign up for free.
