Solution to travel cancellations

Virtual credit cards or VCCs have been around for many years now, saving money of travel companies and providing them with a winning combination of speed and data reliability, particularly for reconciliations.

If the pressures of virtually endless rounds of travel cancellations – followed by hard to predict travel booking surges – has become unbearable, then you are not alone. We all hoped Omicron would be the last COVID wave. And perhaps it will be. But then along came more volatility with the conflict in Ukraine.

But how can you make the payments aspect of this problem – refunds, rebookings and reconciliations – become more manageable?

Unfortunately, as financial ecosystems go, B2B travel payments has changed little in decades. This means that the gap between where it is and where it could be is immense, requiring in some cases a complete digital transformation and optimisation strategy.

Step forward virtual credit cards: In these uncertain times this B2B payment method has really come into its own, allowing agents to claim refunds via both the refund and the card dispute process when merchants don’t provide the service.

In contrast, without cards in play, agents are more at the mercy of the respective airline or hotel policies for refunds (or at worse the whims of the insolvency administrator). Alternatively, they can call on protection provided by government schemes, but these are primarily focused on consumers (think of ABTA/ATOL in the UK). Meanwhile, legal recourse is expensive, risky and, worst of all, very slow.

All of this in a travel distribution chain, which can sometimes involve several parties, meaning that even with the best will in the world payments can take weeks to be refunded as each dollar passes through multiple bank accounts.

Virtual credit cards (or VCCs as many call them) are not some new-fangled invention that COVID drove into existence. In fact, they have been around for many years now, saving travel companies money and providing them with a winning combination of speed and data reliability (particularly for reconciliations).

Their efficiency and reliability also reduces acquirer’s risk by giving greater confidence to everyone in the distribution chain because the monies are less blended. This is very important to understand, as the complete collapse of confidence by acquirer is what has led to many of the B2B payments and refunds problems seen over the last nearly two years.

Sadly, we are living through a time of unprecedented volatility in many aspects of our lives. But the good news is that, with the right planning, your finances need not be one of those.