Corporate travel is an increasingly important part of the new business development, with ambitiously global firms crossing time zones and continents in search of new business. And once that new business is cemented, upkeep is necessary. Along with corporate road warriors come the firms that serve them, known as online travel agencies (OTAs), which need to be efficient, not just in their provision of services but in their own day-to-day operations as well.
In an interview with PYMNTS, Alex Mifsud, CEO of Ixaris, said, “We focus on areas of inefficiencies in payments, for B2B players,” and noted that, with the firm’s latest initiative in tandem with Amadeus, the focus on the vertical that includes online travel agents serving corporate clients recognizes that those firms tend to operate on what could be considered the thinnest of margins, with gross margins in the low to mid-single-digit percentages.
Much of those margins can be lost to costs that can, in fact, be controlled or streamlined with better automation of processes. Among those costs and inefficiencies that eat away at time and profit: high foreign exchange fees, the time spent on itineraries, juggling cross-border bookings and even credit lines that can be expensive.
Mifsud told PYMNTS his firm recognizes that platforms and corporate payments technologies are simply “too hard to build” for firms across any number of verticals, whether operating in B2B or within the financial services space. Thus, Ixaris takes what can be viewed as a “Lego-like approach” to services offered to OTAs (and, by extension, other industries). The “block” strategy helps target certain services and cost centers that are germane to the travel industry itself. The costs mentioned above can — in addition to surcharges and reconciliation costs, which are staff-intensive and center around the handling of actual payments, Mifsud said — account for as much as 25 percent of costs, and with a payments product in place, that margin can be maintained and, ideally, enhanced.
Through the partnership and linkage with the Amadeus B2B wallet, OTAs are able to load funds onto their virtual cards, a positive in an environment where, typically, OTAs have had to operate on credit extended by financial institutions, as Mifsud noted, which can — as business ebbs and flows and payments are made by OTAs — run out rather quickly.
The high volume and relatively low-margin business that is the hallmark of OTAs, said Mifsud, can see inefficiencies alleviated through single-use, reloadable virtual cards that can be used across multiple payments schemes (such as Visa and mastercard, where the latter is also linking up with Amadeus). Other industries that can benefit from virtual cards, according to the Ixaris CEO, include insurance firms.