The fintech boom has reinforced the importance of seamless and efficient B2B payments in the travel industry. In this blog post, we explore the cost of B2B travel payments and the importance of finding cost-effective solutions.
In today's global economy, business-to-business (B2B) travel is an essential aspect of many industries. Companies travel for various reasons, including attending conferences, meeting clients, and visiting supplier facilities.
However, the cost of B2B travel is not limited to airfare, accommodation, and transportation. A significant expense that many companies overlook is the cost of making and receiving payments for B2B travel expenses.
According to a report by global payment and billing solutions provider, AirPlus, the cost of processing B2B payments in the travel industry can be up to three times higher than other industries.
The Vendor's View
When vendors accept payments from businesses, they face several costs that must be considered. Some of these costs include:
Credit Card Fees - Many companies prefer to use credit cards to pay for their travel expenses, which can result in credit card fees ranging from 2-3% of the transaction amount.
Payment Processing Fees - Vendors who accept payments electronically must pay a processing fee to the payment gateway provider. These fees can range from 1-3% of the transaction amount.
Chargebacks - A chargeback occurs when a customer disputes a charge, resulting in a reversal of the transaction. Chargebacks can result in fees ranging from £15 to £75 per incident.
Currency Conversion Fees - If vendors accept payments in a currency other than their own, they may incur currency conversion fees, which can range from 1-3% of the transaction amount.
The Supplier's Perspective
Suppliers who receive payments from businesses also face several costs that must be considered. Some of these costs include:
Payment Collection Costs - Suppliers who accept payments electronically must pay a fee to the payment gateway provider. These fees can range from 1-3% of the transaction amount.
Bank Fees - Suppliers who receive payments via wire transfer or Automated Clearing Houses (ACH) may incur bank fees, which can range from £10 to £35 per transaction.
Foreign Transaction Fees - If suppliers receive payments in a currency other than their own, they may incur foreign transaction fees, which can range from 1-3% of the transaction amount.
Currency Fluctuation Risk - Suppliers who receive payments in a foreign currency face the risk of currency fluctuations, which can affect the value of their payments.
How to Reduce B2B Travel Payment Costs
Reducing B2B travel payment costs can be challenging, but there are several steps that businesses can take to minimise these costs. These steps include:
Negotiating Payment Terms - Businesses can negotiate payment terms with vendors and suppliers to reduce payment processing fees.
Using Alternative Payment Methods - Companies can use alternative payment methods, such as wire transfers or ACH, to avoid credit card fees and currency conversion fees.
Using Payment Gateways - Payment gateways offer a secure and cost-effective way to accept and process payments.
Choosing a Currency Conversion Provider - Businesses can choose a currency conversion provider to reduce currency conversion fees and currency fluctuation risk.
Both vendors and suppliers face several costs when making and receiving payments. Businesses can take steps to reduce these costs and, by taking these steps, businesses can minimise the true cost of B2B travel payments, allowing them to invest those resource into their core business activities.
To find out how Junction Pay brings fintech to the travel industry, providing fast, cost-effective B2B travel payments, talk to our team.
Head of Marketing
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