B2B payments between merchants and the end-providers of services are a fundamental part of the travel and tourism sectors.
Vendors often sell services that are ultimately provided by other firms that require payment. An online travel site that offers hotel and flight packages, for example, must pay the hotels and airlines involved.
These transactions may be a normal part of doing business, but the management and execution of these payments can be very complex, especially when customers require refunds or rescheduling their travel.
In fact, 20% of travel and tourism businesses said B2B payouts are a very or extremely significant pain point, and another 43% said they are a somewhat significant pain point, according to the Smart Receivables Playbook, a PYMNTS and Flywire collaboration. Only 38% of travel and tourism businesses said B2B payouts are slightly or not at all significant.
Get the report: Smart Receivables Playbook
Seeking Convenient Payout Methods
The pandemic has brought other pain points. For example, there were fewer American flyers in 2021 than in any year between 2003 and 2015, according to a Gallup report released Jan. 6 that pointed to less travel by employed adults last year.
With challenges like that, and with 62% of travel and tourism businesses citing B2B payouts as at least a somewhat significant pain point, the B2B payout headache makes a large share of travel and tourism businesses interested in switching payment processors.
PYMNTS found that 23% of respondents said they would be very or extremely likely to change to a new payment processor if the processor would make payouts easy and convenient, and 38% would be somewhat likely to do so. Only 38% of travel and tourism businesses said they would be slightly or not at all likely to switch payment processors.
Reimagining AR and AP Optimization Approaches
The effects of the pandemic over the past 20 months have shed light on these and other longstanding inefficiencies plaguing travel and tourism businesses’ payment operations. This realization is driving many businesses to take a hard look at the payment frictions holding them back and reimagining approaches to accounts receivable (AR) and accounts payable (AP) optimization.
Effective AR management is critical in the travel and tourism sectors. Many merchants sell services that other firms (such as hotels and airlines) will eventually provide, and these require management of B2B payments linked to customers’ original purchases. Along with meeting that challenge, businesses in the travel and tourism sectors must cope with international payments, flexible booking conditions and high payment processing costs.
The key to streamlining these inefficiencies going forward will be to invest in digital innovations that break down cross-border barriers, reduce costs and build future-proof payment operations that can position them for long-term success on the international stage.