Author: Chiara Quaia, VP Market Development – Travel, Mastercard
2020 will be forever remembered as the year that the travel industry dramatically and fundamentally changed. While COVID-19 laid bare weaknesses across multiple industries, possibly the most significant impact has been seen across the travel sector, where organisations large and small continue to navigate unprecedented challenges.
Research shows that although consumer travel plans may be on hold in the immediate term, people will still want to travel in the future, so short-term liquidity is now essential while the industry works towards improving virus hygiene across the entire travel experience. Latest insights from Mastercard through its Recovery Insights: Travel Check-in report based on analysis of anonymized and aggregated sales activity across our network, including in-person and online transactions, shows that promising signs are beginning to emerge in consumer spend – with Italy, Russia and France leading in terms of travel and entertainment spending.
As an industry our collective responsibility is to leverage the technology and partnerships available to support liquidity and mitigate risk. Working together to ensure that travel organisations not only have the ability to navigate the current situation but to emerge stronger than before, supported by solid foundations that enable greater agility and protection for the future.
Here are the 3 key ways that virtual cards are supporting airlines:
- Payment Guarantee: Instability across the travel ecosystem means that airlines need to ensure that they are not negatively impacted by third party bankruptcies and insolvencies. Right now you need confidence that you will receive payment for sales and virtual card acceptance makes that possible.
- Incremental Sales: Today, strengthening strategic relationships across the ecosystem is essential in order to support as many sales channels as possible. Virtual cards give travel agencies payment guarantee, meaning that they have confidence when selling experiences on your behalf. By utilizing virtual cards and boosting relationships between airlines and travel agencies, the whole travel ecosystem has the confidence to continue to interact – helping everyone to capture incremental sales.
- Speed of Settlement: Right now liquidity is key and making sure you receive revenue from sales as quickly as possible is critical. While legacy payment processes can see settlement 30 days plus, virtual cards speed up this process and support quicker access to essential cash flow.
In a different world I may also be talking to you about how virtual cards offer enhanced operational efficiency, payment automation and fraud protection but right now these significant additional benefits come second to essential efforts to preserve liquidity, facilitate payment protection and support incremental sales.
The Mastercard Wholesale Program, a virtual card solution specifically designed for the travel industry, recently expanded to offer more flexibility between airlines and travel agencies through additional pricing tiers. The Program provides a set payment structure, which isn’t impacted by geography, and our expanded product tiers give travel organisations total flexibility to agree mutual beneficial terms.
As the travel ecosystem responds to the global situation and we come together to not only preserve the industry but fuel growth, let’s take the opportunity to ensure that the new normal we are working towards is one that is stronger than before. As airlines and organizations across the industry navigate the challenges they face Mastercard remains firmly by your side, ensuring that payment innovation is doing its part in laying firm foundations for a future that supports greater resiliency and growth.
