Pandemic accelerates the switch to virtual travel payments, new Amadeus study finds

May 20, 2021

Last updated: May 20, 2021

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Driven by the need to improve cashflow, the vast majority (76%) of airlines now believe virtual payments benefit both travel providers and sellers Amadeus transaction data* shows 98.3% of virtual card payments are now accepted by airlines

Driven by the need to improve cash flow, the vast majority (76%) of airlines now believe virtual payments benefit both travel providers and sellers

Amadeus transaction data* shows 98.3% of virtual card payments are now accepted by airlines

The pressures of the COVID-19 pandemic are accelerating B2B payments transformation in travel according to a new study with respondents from airlines, hotels, and travel agencies, undertaken by market research firm Coleman Parks on behalf of Amadeus.

The way travel agencies pay suppliers like hotels and airlines was evolving before the COVID-19 pandemic, as traditional industry settlement schemes and legacy plastic cards were gradually replaced by modern digital payment methods. Virtual cards that reduce manual processes, prevent fraud and improve settlement times were slowly gaining ground.

Now, new data suggests the urgent need to improve cash flow across the industry is helping to overcome barriers to the adoption of virtual cards, rapidly increasing take-up. In fact, 74% of airlines cited cash flow improvement gained from shorter settlement cycles as the top benefit for accepting virtual cards.

Contrary to long-held misconceptions, airlines are increasingly happy to accept virtual card payments from their travel agency partners at scale. In fact, 98.3% of virtual card payments presented to airlines by travel agencies using Amadeus’ B2B Wallet solution were accepted over the past three years.

Damian Alonso, Head of Payer Services, Amadeus commented: "As the pressures of the pandemic continue, the travel industry is accelerating the switch to digital B2B payments This means that agents don’t need to lock-up funds as a guarantee in traditional industry settlement schemes, and providers get paid in near real-time, securing vital cashflow.”

He continued: "It’s true that some merchants historically questioned the acceptance of virtual cards due to a perception of higher costs but those days are coming to an end as the pandemic has highlighted the tangible efficiency gains of being paid digitally.”

Respondents confirmed that during the pandemic, cancellations and refunds have increased significantly, with 93% of travel companies needing to hire more staff specifically to deal with refund administration. However, those travel agencies paying suppliers with virtual cards were four times less likely to have increased headcount (20%) than those still relying on hard to reconcile legacy payment methods (80%).

For more insights on how travel companies are responding to the pandemic through B2B payments transformation please download the newreport.

*98.3% of virtual card payments from travel agencies to airlines made using Amadeus’ B2B Wallet solution were accepted over the past three years.

About the research

The research was carried out by Coleman Parks on behalf of Amadeus during Q1 2021 based on a survey with 150 payment professionals, drawn from travel agencies (50), airlines (50), and hotel groups (50).

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