6/21/2023 0 Comments Stripe virtual credit card![]() The OTA then pushes that unique card number to the GDS, which has all the data associated with your reservation, and they pass the card number and the data to the hotel. The issuer sends the OTA a unique 16-digit MasterCard number, with expiration date, CVC and embedded controls that only allow it to be used only for an agreed upon amount in the merchant category code hotels. The $225 hotel room sale triggers the OTA to call a virtual card API and request a virtual card. We built a tech stack to be able to issue unique virtual card numbers one at a time, at the time the traveler booked the room. OTAs were looking to find a credit card issuer and a credit card processor that could use then-nascent virtual card technology to digitize the process and transmit the funds and the identifying data to the hotels’ accounts receivable departments in near real time, without the hotel having to bill the OTA separately. And when the transaction is completed, it automatically reconciles those room nights. When you give them a credit card for a specific hotel room, their AR system maps that card to a hotel stay. Then as now, most travelers paid for hotel stays with credit cards, so hotels’ accounts receivable processes were and are designed around credit cards. It was costly and inefficient for all parties. Hotels could send them a detailed invoice weekly or monthly, and they would manually reconcile that with inventory sold and send a check. At the time, most OTAs were doing this part offline. You’re done with the transaction, but the OTA still needs to pay the hotel the agreed upon amount. They’re the merchant in this scenario, so on your credit card statement you’ll see a charge from the OTA or TMC for $225. The OTA charges your card $225 through their acquirer. For example, let’s say you reserve a hotel room through an OTA for $225. In exchange for acting as a marketing and sales arm for the hotels, OTAs would earn a commission or assess a fee on room nights. They would then publish the listings in a user-friendly platform where travelers could book rooms directly through an API integration to the GDS, as opposed to having to call a bunch of hotels on the telephone and book directly. Their business model, which was relatively new at the time, was to collect and aggregate data about room inventory and prices from global distribution systems (GDSs) such as Sabre, Amadeus and Travelport. With business slumping, OTAs & TMCs were looking for ways to increase efficiency and cut costs–for themselves, and for the hotels they served. During the Great Recession, corporate or leisure travel collapsed. I spent 15 years helping develop this technology, starting in the mid-2000s.Īt the time, what we were building was targeted at helping online travel agencies (OTAs) and Travel Management Companies (TMCs) better service hotels. Think of it as a Virtual Card as a Service. With the rise of third party APIs and microservices, companies building digital businesses can integrate customized virtual card capabilities right into their operational processes. ![]()
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