The Travel Sector Is Retooling Back-Office Payments in Response to the Crisis

The coronavirus pandemic is highlighting the deep fault lines in the travel sector's technology and workflows. It has especially shaken up how hotels, airlines, agencies, and vendors handle payments. "The challenges airlines and agencies have faced in issuing refunds for canceled flights has especially called out significant problems in payments tech," said Kristian Gjerding, CEO of CellPoint Digital, which offers payment services. Responding to the challenge, obscure tech companies aim to upgrade the ways travel suppliers connect with banks, next-generation financial services like Apple Pay and Alipay, vendors of operational software, intermediaries, aggregators, and travel buyers. A handful of industry players released in May new technical standards for how hotels, vendors, and financial institutions send money. The goal is to make things more modern and efficient. Mastercard is sponsoring an "early adopters program" for new technical standards created by the non-profit Hospitality Technology Next Generation (HTNG). It has roped in Melià Hotels and online travel agency Logitravel so far. New Payments Tech Can Catch Otherwise Lost Money Underpinning a lot of the payment tech innovation is the concept of virtual cards. While corporate spending on virtual cards will drop 4 percent year-over-year in 2020 due to corporate travel's collapse, the number of transactions will still rise 11 percent year-over-year, forecasts Jupiter Research. During the pandemic-related crisis, virtual cards protect the travel supplier against default. If a travel agency were to go bankrupt, virtual payments ensure that an airline or hotel would get their money regardless and not need to join a queue with the agency's administrator and hope to get paid someday. "If the agency is going out of business, there's more security of getting paid for the hotel via virtual payments," said Chiara Quaia, vice president B2B travel, enterprise partnerships for Mastercard. "Often a hotel, for example, will need to wait until a bank transfer from a travel agen