Online travel agencies are the backbone of the travel community globally. They connect travellers with destinations, hotels, car rentals and activity providers as well in a single click. But while they are smart facilitators of booking which are facilitated instantly, cross border payments especially to suppliers often become the road blockers in the otherwise seamless process as these payments remain complex, costly and slow. Through the article, we’ll explore the key challenges OTAs face, hidden costs and payment delays and how digital solutions like TransFi can help combat these with solutions like TransFi’s single API infrastructure and connectivity with supplier settlement systems worldwide. Let’s find out more below!

Understanding OTA cross border payments 

OTAs are constantly involved in handling multi currency transactions where each booking can involve multiple parties - travellers, hotels, airlines, insurance providers as well as local activity vendors. Cross border payments in such scenarios become challenging while;

• OTAs need to pay international hotels and airlines in local currencies.
• Managing fluctuating FX rates.
• They need to comply with tax and AML regulations across different geographies and jurisdictions.  

Key challenges in OTA supplier settlements 

Some of the major recurring challenges include;

1. Currency Volatility

OTAs often need to pay suppliers in foreign currencies. Fluctuating exchange rates can cause margin erosions and also create recording and account complications.

2. Slow settlement cycles

Traditional banks and wire transfers take 3 days to sometimes more than a week leaving suppliers waiting and retained by the cuticle cash flow.

3. High transaction costs

SWIFT fees, correspondent bank charges and intermediary reductions at various steps reduce profitability for both suppliers and OTAs.

4. Complexity in multi party payments

A single booking package may involve hotels, airlines, activities and third party services each pertaining separate payout cycles making the system complex.

5. Regulatory Compliance

Cross border transactions must adhere to KYC/AML regulations and country specific regulations related to travel and payments which slows the process and creates risks of authentication at every stage.

6. Reconciliation and reporting 

Matching thousands of bookings to payouts across multiple currencies and payout methods can overwhelm finance teams, create chaos and delay settlements. 

Hidden Costs and payment delays in OTAs

Payment delays don’t just cause the singular issue of inconvenience to suppliers, but they create a ripple effect causing multi faceted issues;

1. Supplier Strain - Hotels and airlines might impose stricter policies or terms demanding higher rates to compensate for delayed cash flow.

2. Operational disruptions - vendors may withhold inventory and pause services if payments lag constantly which would in turn lead to lost bookings.

3. Reputational damage -  travelers expect instant settlements and confirmations in this era of fast paced global connections. Settlement delays risk partner trust and can stain long term relationships possibilities. 

4. Cash flow imbalance - OTAs face difficulty in managing a streamlined workflow and working capital when payouts are irregular and unpredictable. 

Digital payment solutions for Global Travel agencies

To stay competitive in this evergoring digital market, OTAs are adopting digital first solutions which enable settlements which are instant, easy and cheaper. Key strategies for the forward leap include;

1. Multi currency wallets 

OTAs requirement to hold and manage funds in multiple currencies can be settled by multi currency wallets to reduce FX risks and settle suppliers faster.

2. Automated reconciliation 

Technically built platforms and AI powered systems match bookings with payouts in real time, reduces manual computing errors and eliminates accounting delays. 

3. Payment APIs

Single API integrations allow OTAs to automate vendor payments, manage compliances and execute global transactions all in a single dashboard. 

4. Blockchain and stablecoins

For high volume, cross border transactions, blockchain based payments create an innovative space lowering fees and speed up transactions creating transparent networks across the globe.  

How can TransFi help?

TransFi offers a single API purpose-built for OTAs and international travel platforms. Key features include;

1. Instant Cross border settlements

• It enables movement of funds within seconds let alone hours.
• Hotels, airlines and activity provider payments get settled in seconds.

2. Payment automation 

• The system enables the automation of any kind in the payment cycles to the stakeholders.
• This eliminates any manual procedure timings and is directly replaced by real time API payments.

3. Transparency in fee structure and low costs

• These transactions don’t correlate to any hidden costs and deductions or intermediary bank fees.
• The system is blockchain based - fully visible to both clients and vendors. 

4. Scalable API integration

• Easy integration into online travel platforms as well as other tools.
• It supports bulk payments, multiple vendor payments or small size payments across the globe.

5. Multi rail support 

• The system is equipped with bank transfers, digital wallets and stablecoin and digital currency payouts as well.
• The flexibility of the methods of payment remains in the hands of the vendor and the receiver. 

TransFi is helping many OTA companies in the global realm embrace a better future with the ease of the best services and interface at power by connecting users with over 100+ currencies, 250+ local payment methods, and 80+ digital assets, giving both senders and receivers control, speed, and cost savings. To explore tailored cross border payment solutions for online travel agencies, get in touch with the expert team at TransFi expect the best resolutions at the earliest!   

Also read: Netherlands’ Payment Rails & How They Work – iDEAL, SEPA & Real-Time Payments

Frequently asked questions (FAQs)

1. What are the main payment challenges faced by OTAs? 

OTAs often face challenges like slow bank transfers, high FX fees, complex multi party settlements and regulatory hurdles when dealing with various geographies and jurisdictions in their day to day operations. 

2. How does currency volatility cause hurdles in OTA payments? 

OTAs often need to pay suppliers in foreign currencies. Fluctuating exchange rates can cause margin erosions and also create recording and account complications.

3. Can OTAs use blockchain and stablecoin solutions to make payments?

Yes, for high volume, cross border transactions, blockchain based payments create an innovative space lowering fees and speed up transactions creating transparent networks across the globe.  

4. How can payment APIs help OTA payments across borders?

Single API integrations allow OTAs to automate vendor payments, manage compliances and execute global transactions all in a single dashboard. 

5. How can one connect TransFi with OTAs?

It can be connected easily via TransFi’s API and minimal developmental input.