Running a travel business isn’t easy. Between handling settlements, managing rolling reserves and contending with high transaction fees, the challenges can seem endless. However, fear not, with the right tools and support, you can navigate the growing industry with confidence and achieve remarkable success.
Below, we explore the common issues travel merchants face and how a trusted payment provider like Truevo can support your business growth and boost your efficiency.
The usual hurdles for travel merchants
Settlements
In the travel industry, delayed settlements can seriously disrupt cash flow. For instance, the average period from booking to the first day of a holiday or flight is around 60 days, which is perceived as a potential risk. This leads to long or split settlement periods that impact liquidity and can make reconciliation difficult. This can be quite a headache for many travel businesses across Europe, causing cash flow issues that can slow down both operations and growth.
How Truevo helps: We know how crucial speed is, which is why we offer rapid and straightforward settlements. With our service, you can access funds faster than with other payment processors, ensuring your business is always running smoothly and efficiently. We also use innovative AI risk models to better understand and deter potential risks, offering you a more secure and reliable service. Stay tuned for more details on this!
Rolling reserves
Rolling reserves can be quite a hassle, especially in the travel industry. Acquirers usually hold around 5-10% of the total transaction volume as rolling reserves. With the post-pandemic boom in travel, many businesses have seen their reserve amounts go up due to higher transaction volumes. This means a big chunk of revenue gets held back, leaving less money available for day-to-day operations and creating cash flow issues. Additionally, rolling reserves are often maintained to cover potential chargebacks. Each card scheme has a different dispute lifecycle, making it even more challenging for businesses to manage their finances and support growth.
How Truevo helps: Truevo offers low rolling reserves and settlement terms to help you manage your cash flow more effectively. This flexibility means you have more control over your finances, reducing the strain on your daily operations. Plus, we have a dedicated team to help you win chargeback disputes within the set timeframes, protecting your revenue and ensuring a fair outcome. We don’t mean to boast, but we win 90% of our chargebacks!
Operational capital
Keeping enough operational capital on hand is crucial. Without it, covering daily expenses and investing in growth becomes a tough challenge. The post-pandemic recovery has piled on the pressure with increased operational costs thanks to higher passenger volumes and the need to juggle fluctuating demand. Without adequate operational capital, keeping the lights on and taking advantage of growth opportunities becomes a bit like trying to fly a plane without any fuel – not going to get you very far!
How Truevo helps: By ensuring quicker access to your funds through rapid settlements and offering low rolling reserves, we help you maintain a steady flow of operational capital, allowing you to cover expenses and seize growth opportunities.
High transaction fees
The travel industry is super competitive, and high transaction fees can eat into your profits, making it hard for you to offer competitive prices while maintaining financial health. Managing these fees effectively is crucial to maintaining profitability in a highly competitive market.
How Truevo helps: We can offer blended and interchange plus ++ transaction fees, giving you predictability and helping you manage your budget more efficiently. Truevo also provides a billing structure that is tailored to your business. No more surprises – just straightforward, manageable costs.
Foreign Exchange
Dealing with transactions in multiple currencies can be time-consuming and costly, especially with fluctuating exchange rates and spot pricing. Foreign transaction fees typically range from 1-3%, and SMEs spend an average of 3.6 hours per week on manual payment reconciliation, increasing administrative costs and risk of errors.
Multicurrency settlements offer significant advantages:
- Reduce FX Fees: Handle transactions in their respective currencies to avoid conversion fees. For example, pay US suppliers directly from a USD account to save on EUR-USD conversion fees.
- Hedge Against FX Fluctuations: Holding funds in multiple currencies mitigates risks from currency fluctuations. If you have 100k in both EUR and USD, and the Euro depreciates by 2%, your loss is limited to 2k rather than 4k. Inverse relationships between currency pairs, like USD-EUR, provide natural hedging.
An acquirer accepting various currencies and automating this process can save you significant time and money.
How Truevo helps: With Truevo, you can accept payments in over 150 currencies and receive settlements in 17 global currencies. This multi-currency support simplifies reconciliation and reduces administrative overhead, saving you time and minimising errors.
At Truevo, we’re all about making life easier for travel merchants. Our solutions are designed to tackle your unique challenges, from flexible rolling reserves and next-day settlements to multi-currency acceptance and fixed transaction fees. With Truevo by your side, you can focus on what you do best – creating unforgettable travel experiences – while we handle the payments.
Ready to see how Truevo can transform your travel business? Reach out to our team today. Let’s make your financial operations as smooth and stress-free as possible.
