High interest rates hitting travel even harder due to needless payment collection delays - Nium - TravelMole

High interest rates hitting travel even harder due to needless payment collection delays – Nium

Monday, Aug 14, 2023 0


  • High interest rates – set to increase further according to experts – are hitting travel companies hard as too many depend on credit to fund delays in getting paid. 
  • But travel companies should no longer have to wait 60 days (or more!) for payments – the technology is there to resolve this problem.
  • Real-time global payments expert Nium offers five recommendations for travel businesses on how to get paid quicker.


With global interest rates hitting historical highs – currently at 5.25% in the UK following an increase recently and 5.25% in the US – and economists anticipating further increases, many businesses across the whole of the travel spectrum are finding it harder to meet their debt commitments or raise further cash.


However, it is often overlooked that one of the main credit needs for travel businesses, particularly hotels and airlines, is to fund the delay between the provision of services and receiving payment for them.


Whilst this may have been manageable in a low-interest rate environment, this can no longer be sustainable. Not least as many travel businesses are still paying higher than average interest rates for their credit, due to the poor credit records they gained during the global pandemic.


Spencer Hanlon – from real-time global payments leader Nium  – comments: “We frequently see travel businesses waiting 60 days, and more, to get paid. At the same time, we see people funding that gap using credit cards, easily paying 12% or more in annual interest rates. That means they’re losing 2%, and more of the value of their services, in just waiting to get paid!


“If your bank put transaction fees up by 2% per transaction, you’d be angry, and rightly so. And with the current uncertain economic outlook, it is quite possible that even higher levels of interest rates are coming.


“What’s the answer to this problem? Essentially getting paid more quickly as slow collection affects the bottom line.


“But why are so many travel companies so slow in collecting payments? Far too many travel businesses are still using 1970s era legacy systems to collect payments, often arriving via old fashioned physical credit card payments or traditional bank transfers.


“In this day and age, there is simply no justification for this. The secret to faster collection ultimately lies with a mixture of automated processes and the use of virtual credit card payments, or ‘VCCs’. This combination can significantly reduce costs and improve productivity by automating booking reconciliation and providing greater protection against failed and non-refundable supplier payments.”


Nium recommends that companies take the following actions to get paid more quickly:


  1. Have complete visibility of all transactions: reconciliations shouldn’t be time consuming.
  2. Speed up your processes: no more twice weekly payment schedules, those days are gone.
  3. Ensure everything is easily controllable: you need to be able to specify precisely the currency of use, where the transactions can occur, and control the dates on which transactions can be executed.
  4. Adopt modern fintech payment methods that are both instant and low in cost, most probably in the form of virtual credit cards (but other options exist).
  5. In short: automate all financial payments processes or you´ll forever be at the mercy of volatility of all kinds, be that interest rates, inflation, or booking cycles.

Learn more about Nium

Most Read

Sophia of Destinations International about the work the organisation is doing on Social inclusion

Don Welsh President/CEO of Destinations International at his organisations annual conference,Tampa

Jane Cunnigham explains how European uencing policy within Destinations International policy

Kristin from Miles Partnerships at #DIAC24 in Tampa about the new Wayfinfer tools for Destinations

Revolutionizing Mobile Connectivity: Boris Bijlstra on HUBBY eSIM

Capturing Glasgow’s Vibrancy: An Interview with Susan Deighan, Chief Executive of Glasgow Life

Lebua Hotel & Resorts: Rajan Khurana on Hospitality and Bangkok’s Charms

Sustainable Tourism and Growth: Insights from Chiravadee Khunsub from Tourism Authority of Thailand

Revolutionizing Travel: SmartSIM USA’s Dale Takio Unveils the Power of E Sims

TravelMole Interview with Hishan Singhawansa, Deputy CEO of Cinnamon Hotels & Resorts, Sri Lanka

Unveiling the Essence of Magari Tours: A Dive into Authentic Italian Experiences

Florida’s Tourism Boom: Dana Young Analyzes Surge in UK Visitors

Our emails to you has bounced travelmole.com Or You can change your email from your profile Setting Section

Your region selection will be saved in your cookie for future visits. Please enable your cookie for TravelMole.com so this dialog box will not come up again.

Price Based Country test mode enabled for testing United States (US). You should do tests on private browsing mode. Browse in private with Firefox, Chrome and Safari