Virtual card payout solutions are rapidly transforming the travel and leisure payment landscape. The travel industry, known for its complex, high-value transactions across multiple currencies and numerous intermediaries like online travel agencies, airlines, and hotels, finds an ideal match in virtual card solutions. These solutions provide a significant leap forward by improving security, efficiency, and control over financial transactions. Experts predict global virtual card spending will surge by 355% in 2028, rising from USD 3.1 trillion in 2023, highlighting the swift adoption and profound impact of this technology. By leveraging the power of virtual cards, travel intermediaries, suppliers, and consumers can all experience a smoother, more secure journey.
Virtual card payout solutions enable secure and efficient payments between travel intermediaries (such as OTAs (Online Travel Agencies)) and service providers such as hotels, airlines, and car rental companies. Unlike traditional methods that transfer consumer card details through multiple suppliers, virtual cards use a 16-digit number with an expiry date, limited to specific transactions. This controlled use ensures the card can only be used for designated suppliers, amounts, and dates, therefore increasing security and reducing fraud. Virtual cards operate like physical cards but are tailored for single or restricted-use transactions. For example, a virtual card issued for a EUR 500 hotel booking can only be used for that specific hotel and amount, which in turn prevents misuse. Travel agencies are increasingly adopting virtual cards to become merchants of record, taking ownership of the customer relationship and streamlining the payment process from customer to service provider.
Payment Service Providers (PSPs) have traditionally focused on enabling secure and efficient transaction acceptance. However, their role has expanded substantially and now encompasses end-to-end payment processing, including both acceptance and payout services. This dual functionality offers a seamless payment experience, reducing cash flow mismatches and reconciliation challenges. By integrating virtual card issuance into their services, PSPs can manage the entire payment cycle – from customer payments to supplier payouts – thereby boosting operational efficiency and security.
The travel intermediary market is ideal for virtual card payout solutions due to the high complexity and volume of transactions it handles. They can ‘bundle’ various travel services into cohesive packages for consumers. By using virtual card payouts, they can streamline payment processes, improve cash flow management, and minimise financial risks. A virtual card-issuing solution can also simplify reconciliation, providing better visibility and control over transactions. Additionally, offering a comprehensive payment service makes travel intermediaries more attractive to consumers, who enjoy a personally tailored, seamless, and secure booking experience.
Virtual card payout solutions offer substantial benefits to multiple stakeholders within the travel industry. Travel intermediaries such as OTAs and travel agencies enjoy reduced complexity, improved cash flow, and enhanced security. Consumers benefit from a seamless booking experience, assured that their financial data is safe. Additionally, travel suppliers receive timely and secure payments, ensuring smooth service delivery without financial setbacks. This integrated approach forms a robust safety net, protecting everyone from potential financial disruptions. In a research study by Worldline and Phocuswright, 90% of travel planners surveyed expect virtual cards to become the dominant approach to booking corporate travel. The goal of virtual corporate cards in business travel is to automate time-consuming expense tracking. Companies can create virtual corporate cards in just a few clicks, making funds instantly available to employees who need them for travel. Virtual payment cards give organisations real-time visibility into spending. In addition, spending data can be integrated with accounting systems, making settlement faster and easier while also removing human error.
Virtual card payout solutions herald a significant transformation in the travel and leisure industry. By providing a cohesive and secure payment process, these solutions tackle long-standing issues such as cash flow management, reconciliation challenges, and financial risk exposure. Integrating payment acceptance and payout services results in a more efficient and transparent financial ecosystem. As the market expands and evolves, adopting virtual card solutions will become standard practice, reshaping travel payments and offering a more reliable, user-friendly experience for all involved. Virtual card payout solutions are not just a technological advancement but a strategic evolution that improves travel payments’ efficiency, security, and overall management.
Worldline Virtual Pay solution in partnership with Visa: a Milestone in Travel Payment Innovation
Partnering with Visa marks a monumental development in the virtual card space. In 2021, the global virtual card market processed about USD 1.3 trillion, with expectations to soar to USD 6.8 trillion by 2026. Visa’s involvement highlights the growing significance of virtual cards in the travel industry, providing enhanced security, efficiency, and protection against financial disruptions. This partnership not only validates the potential of virtual card solutions but also extends their reach and reliability, benefiting all participants in the travel supply chain.
This editorial piece was first published in The Paypers' Embedded Finance and Banking-as-a-Service Report 2024, which is the latest comprehensive market overview and analysis focusing on the key players and products within the Embedded Finance and BaaS ecosystem.
Damien Cramer leads the Airlines and E-Travel Vertical for Worldline's Enterprise Business. His team is focused on supporting global travel businesses to increase their market coverage, improve their customers' payment experience and ultimately help them grow in a sustainable and effective way. Damien has more than 20 years of experience in leading payments and transaction services teams across all segments of the market.
Worldline helps businesses of all shapes and sizes to accelerate their growth journey – quickly, simply, and securely. With advanced payments technology, local expertise and solutions customised for hundreds of markets and industries, Worldline powers the growth of over one million businesses around the world. Worldline generated a 4.4 billion euros revenue in 2022.
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