Virtual cards for traveling – A new technology solution for OTA businesses

We have gone through the first type of virtual card, which is the purchasing card. Although it does not start as a form of virtual card, it is the foundation to be able to give birth to virtual cards later.

In this article, let's join FinFan to learn about another type of virtual card used by many OTA businesses: virtual cards for travel.

What are virtual cards for traveling?

Virtual cards for traveling are just like corporate cards for traveling that FinFan has presented in the article about virtual cards and the comparison with corporate cards.

In that article, FinFan partly helped readers visualize the concept as well as the benefits that corporate card for traveling brings to businesses not in the tourism sector, including:

Automatically pay for all services and utilities throughout your business trip by using a virtual card

With virtual cards for travel, employees on business trips no longer have to go through complicated procedures and go through many steps to sign authentication documents before proceeding with the trip.

Furthermore, with the integrated virtual card system, after employees use one card to book a hotel, they can immediately use another card to book a party with partners, etc.

Support the company's financial managers to control finances most transparently and effectively by using virtual card management tools.

Details of transactions via these cards will be recorded in the payment system connected to the card provider such as FinFan and a detailed report will be sent immediately to the corporate financial management department.

From there, CFOs can calculate more accurately and set more appropriate per diem limits for their employees, and at the same time, prevent unfortunate cases of employees using business expenses for personal expenses.

Moreover, with the detailed data provided by the card management software, the corporate financial management department can also prepare financial reports more easily by simply extracting the income and expenditure files from the card management software without the need to compile complex invoices and documents, leading to errors or omissions in financial reports.

Ensures more safety and security than using a bank's corporate card.

As stated in the previous part of the article about virtual cards, when using a corporate card, users can still receive the above advantages when they can be used to pay for any service during a business trip and also it is very easy for the corporate financial management department to retrieve information.

However, with just one card that the business owns, information is sent to many parties. This leads to a very high possibility of security leaks and information on the card is easily stolen.

With virtual cards, once you have used one card for a room reservation, you can absolutely get another card for booking a party with a partner. That will make the information on the card always secure and very difficult to steal.

Virtual cards for an online travel agency (OTA)

If a virtual travel card for a business is usually only used a few times a month when employees have long business trips that require a sum of money to pay, then a virtual travel card for OTA is also used for more purposes due to the complex nature of this industry.

For an OTA, they have to deal with every day:

• Source of revenue from individual customers, customers who book rooms, tours, cars, etc. of a service provider on OTA's application or website.

• Source of payment to vendors providing travel services and receive commissions from them.

• Like many other companies, OTAs also have to pay per diems, salaries, wages and insurance for their employees.

With all the above costs and revenue sources, it will be very difficult for the company's financial management department to manage all the cash flows in and out of the business without new technological measures to support them.

Traditional payment methods do not meet the demands of OTAs.

*Automated Clearing House (ACH)

ACH is a US-based system, which is a limitation when it comes to international travel.

It’s also slow. Many ACH solutions have built-in delays because they require manual preparation of NACHA files and batch file uploads.

Settlement times also take longer with ACH payments because they are processed by clearing houses at set times throughout the business day. It’s normal for these payments to take up to three business days to be settled. Some banks also impose limits on how much money can be transferred via ACH payments, which may cause larger transactions to fail.

Billing and Settlement Plan (BSP)

BSP is an electronic billing system offered by the International Air Travel Association (IATA) that facilitates the flow of funds between travel agencies and airlines on a scheduled basis.

The system is fairly inflexible and doesn’t scale well for many modern OTAs. This was a big issue during the height of the pandemic when there were mass cancellations and airlines were unable to unwind payments and effectively process refunds.

The BSP system also consolidates all individual payments from numerous travels and trips into lump-sum payments, which can cause issues with reconciliation and makes it harder to track individual transactions if issues arise (e.g., cancellations and refunds).

Another issue with BSP is that it excludes many low-cost carriers that are linchpins in various travel segments including regional travel, smaller airports, and the visiting-friends-and-family (VFF) market.

If you’re a new travel seller, you may need to achieve accreditation with the IATA and establish a line of credit with the settlement service.

These sellers may also be subject to lower remittance holding capacity — a limit on cash flight sales until a travel seller has paid a remittance to the airline.*

*Source: Lithic

The above payment methods are only popular in the US, another popular global payment method that may be suitable for OTA is

Physical Debit and Credit Cards

However, physical debit or credit cards are also not the optimal choice for OTA businesses when, as FinFan mentioned above, this type of card contains too many security holes that make it possible for bad guys to steal our information at any time.

Virtual card, the optimal solution for OTA businesses

If the traditional payment methods mentioned above are not a suitable method for OTA businesses to apply to manage their income and expenditure, then the virtual card is the most suitable method for the following reasons: • Can be easily managed by software: The characteristic of virtual cards is that these cards are designed by fintech companies in conjunction with card issuers and banks in a digital way. Therefore, they will have APIs integrated into customers' business financial management software. From here, financial managers can easily view parameters from these cards in the most effective way.

• All revenue and expenditure activities of the business are shown in real time: This is also a plus point for OTA businesses because every day, they have to receive hundreds of thousands of transactions at the same time. However, with old payment methods, it is difficult to manage them at the same time, and this easily leads to errors.

• Disputes can be resolved as quickly as possible: Because each transaction is made on a separate card, if the customer has problems arising during the transaction, what business financial managers need to do is look up the card number where the transaction occurred, thereby refunding customers as quickly as possible without causing inconvenience to vendors.

About FinFan

FinFan is a cross-border embedded financial services company that focuses on mass disbursement, fund collection, card processing, IBAN, and digital APMs solutions, which can provide valuable input and integration on and for the same.

FinFan is already integrated with almost the world's well-known MTOs, PSPs, switch, and core fintech platforms such as Money Gram, Thunes, Qiwi, Remitly, World Remit, Bancore, PaySend, Terrapay, Ria Money Transfer (Euronet), Dlocal, Ripple, TripleA, FoMo Pay, Wings, etc.

For more information, please get in touch with us through:

🌐https://finfan.io

📞(+84) 2866 85 3317

✉ support@finfan.vn

LinkedIn: FinFan