Payments and FX in Travel: Lets Call a Spade a Spade
“We could save you money!” - How many times have you heard that from FX houses making sales calls? Plenty I suspect and it is no wonder why. Lead conversion rates are so very low; the retail FX market has been at a crossroads for some time now. Hundreds of businesses all claim to be as competitive as possible, with cost effective payment methods and a snazzy online system that suddenly puts their business into the categories of ‘FinTech’ or ‘Disruption’. It’s a race to the bottom for FX & Payments Houses, and as a travel company you shouldn't be heading there with them.
Margins are being squeezed for Retail FX houses from all angles as they try and retain a client base who most likely have more than one active account, are comparing rates and get actively pursued to open another on a daily basis. Some providers offer new ways of managing your FX exposure, such as Peer-to-peer (P2P lending or highly complex derivatives that are provided with little education of the risks. As with everything, all is not as it seems - P2P lending is a great idea in principle, but the reality just does not stack up to it. A functioning P2P lender needs a base on both sides of the market across a number of currencies, which in practical terms requires bases in the US and the UK, and the Eurozone, and Australia & NZ & Asian markets & South American markets for it to have the volume to pair trades. Then there are the other drawbacks, if you aren’t paired, you’re just doing what everyone else is, covering against the market, but at minimal rates of exchange. FX is a volume business and every payment house believes it can generate the volume to justify the margin. There is a wider problem for the industry in general - a price war isn’t going to end well, in the shady world of beating your competitor and raising the margin later on. Or just pricing everyone so tightly in the hope more will follow - but what if they don’t? Where are the businesses that openly sell their product first and foremost rather than it’s competitive prices - a product that justifies a reasonable cost of business?
Well, the products that justify reasonable rates exist believe it or not. Many businesses offer useful products to manage a whole number of things - be it industry specific platforms and partnerships, diverse and risk free hedging tools and some even have connections into global banks who just don’t have the time to look after you and your SME, but see the numbers at an aggregate level and want to establish a presence through an entity that isn’t the bank. These entities have immense payment capabilities and leverage global payment networks that before, you just couldn’t get a look in on.
You do not know about them because they are tarnished by the industry as a whole - you see a retail FX house and you conjure up all of the above before you even break down the product offering. Most people have become tired of simply getting the best rate if the alternative is to give a little on rate if you have your basic needs met - a provider who understands their sector and has tools specific to them; a service that is professional, reliable and honest; transparent pricing that is fixed and is not going to rise after a few months when you no longer have the time to repeatedly rate check; products that are of actual benefit to your business and actually exist; and different regulated suppliers that can be utilised through one connection.
Other innovations offer a unique way of processing payments, such as virtual cards. They offer 0% margin and accessible international payment options but they also have their drawbacks - they have to make money somehow? Usually, you have to load the virtual cards in a currency - this requires a currency exchange. Then there are the interchange fees that often cost more than traditional methods, and have to be borne by someone. Ultimately, every business has a bank account that can receive payments, but do all businesses adopt virtual cards? For the moment, no.
As a travel company you should not have to dread admitting you buy from European suppliers or sell to a South African Market. Imagine a bold new world where sales were driven on the unique and exciting nature of your product rather than how little it will give it away for. For travel this is nothing new - travel is by nature international, which means managing FX and supplier payments is part of the daily course of life. Trust My Travel was setup to fight on behalf of travel businesses- understanding that this sector is both large enough, but also so fast moving that it requires a tailored proposition that removes the headaches.
Trust My Travel gives you a global merchant account that taps into 100’s of acquirers in every region on the planet meaning, where possible, your customers pay locally and keep both yours and your customers’ costs down. Rather than battling with banks and brokers, we automatically give you our Multi-Currency Pricing connected in to an aggregated supply of regulated suppliers from around the world. This integrated solution, sells your products in your customers’ local currency, and you receive your base currency in full, regardless of the situation. For example - you sell your product for 100.00 USD but have a customer paying in GBP, you will receive 100.00 USD every time - it’s that simple.
Statistics show that on average 25% of customers will not follow through with an online travel purchase if they have no recognition of its value in their base currency, so do you really want to be missing out of quarter of your potential market. So with the Trust My Travel solution you not only up your conversion rates but ensure your system seems local.
Need to make supplier payments around the world? You can do this through the same solution as your incoming requirements - removing the need to move money around. Simply login in to our TripPayments platform and pay locally within the country of payment, at a fraction of the cost of a wire.
One solution with 1000’s of connections giving you a truly end-to-end solution to receive payments, mitigate risk, pay suppliers and secure margins in full: designed for travel, and with support, not endless sales.