A new report by Airwallex and Skift Research reveals that a whopping 66% of travel companies worldwide are struggling with shrinking profit margins due to outdated payment systems.
This isn’t just a minor inconvenience; the study found that 90% of these companies are prioritizing upgrades to their payment and financial operations systems within the next year.
The report, based on a survey of 473 travel executives from seven global markets, highlights the challenges of managing cross-border payments. 70% of travel companies find it increasingly difficult to navigate the diverse range of new payment methods emerging in different markets.
The survey also uncovered the financial struggles faced by the travel sector, including:
- Managing local payment systems: Companies struggle to handle the variety of local payment methods, especially in Asia where peer-to-peer systems are gaining popularity.
- Foreign exchange fees: Managing multiple supplier and vendor payments in different currencies and reconciling data for bookings, payments, commissions, and refunds is a major challenge for over half of travel executives.
- Volatile exchange rates: 67% of executives find cross-border payments more complex due to fluctuating exchange rates.
The report underscores the need for travel companies to modernize their payment systems to improve efficiency and profitability. Almost two-thirds of travel finance executives believe that outdated systems are directly impacting their profit margins, with many reporting at least a 2% erosion in profits.
Jack Zhang, Co-founder and CEO at Airwallex, said:
“As global travel continues to boom, travel companies increasingly rely on quick and seamless cross-border payments to surpass customer expectations. However, our latest study shows that slow and outdated payment processes are increasing the cost of moving money internationally, which is eating into their profits. Modernizing their financial operations with a unified and scalable payment solution will be critical to reducing the cost and friction associated with managing cross-border transactions.”
Rafat Ali, CEO and Founder of Skift, added:
“Our survey of global travel executives uncovered new, unique, and even surprising insights into why unified payment and financial systems are critical in meeting today’s traveller expectations. Amid an unprecedented rise in international tourism, the report intends to give travel companies a framework to expand their knowledge base and build more efficient, effective, and profitable businesses through modernized payment and financial operations systems.”
The key takeaways are:
- Outdated payment systems are hurting profit margins: 66% of travel companies are experiencing reduced profits due to outdated systems, with many reporting a 2% erosion.
- Cross-border payments are complex: 70% of companies find cross-border payments difficult due to the diversity of payment methods in different markets.
- Local payment methods are gaining popularity: Peer-to-peer systems are gaining traction, especially in Asia.
- Managing foreign exchange is a challenge: Volatile exchange rates and reconciling data for multiple suppliers and vendors in different currencies are major hurdles.
- Modernization is essential: The article emphasizes the need for travel companies to upgrade their payment systems to improve efficiency and profitability.
The report highlights the need for travel companies to invest in modern payment systems to stay competitive and thrive in the global market. The report serves as a wake-up call for travel companies. Investing in modern payment systems is no longer optional; it’s crucial for survival and growth in a competitive global market.
Read More On: Outdated Payment Systems Eroding Profit Margins Across Travel Industry – Fintech Singapore (fintechnews.sg)
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