Best Card Solution Winner: Agoda Company Pte. Ltd.

Published: Mar 2022


Photo of Ekkaphap Thengtrirat, Senior Banking Solutions Manager.

Ekkaphap Thengtrirat

Senior Banking Solutions Manager

Agoda.com (Agoda) is a leading online travel agency headquartered in Singapore with global operations based in Thailand. The company is part of Booking Holdings Inc. with a key focus on the Asia Pacific region.

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In-house virtual card programme goes global

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The challenge

Agoda receives proceeds from travel bookings to settle its payment obligations to hotel partners via two payment methods: virtual cards and bank transfers. For many years, hotel payments via virtual cards were outsourced to a third-party virtual card vendor. As in dealing with any external party organisations, common errors, delays and communication mishaps, are expected.

In an attempt to alleviate this issue and optimise returns, Agoda decided to internalise the card-issuing processes and developed a virtual card self-issuance programme. In early 2020, Agoda sought out to partner with a global investment banking company and one of the world’s largest credit card networks, to make this dream a reality.

Building this product amidst the height of a pandemic and an equally challenging travel landscape was no easy undertaking. Given the amount of investment and resources required across all segments of the business, the risks were high. In order to succeed, it was vital to implement a robust cash management solution that would ensure complete accuracy and the timely completion of fund settlements 24/7. Currency coverage, cost effectiveness, operational efficiency in funding and settlement management, and quality of the overall design solution were key.

Despite this, Agoda worked strategically with its partners and tapped into its global resources to effectively navigate through these challenges. The digital travel platform managed to launch an entire infrastructure that almost doubled the number of settlement currencies, and achieved further efficiencies for the business – saving 30 working hours per month and reducing almost 10% of total annual FX-related costs.

The solution

The success of the in-house virtual card programme relied, firstly, on selecting the right partners to work with. Agoda’s treasury team undertook a rigorous RFP process to select the best banking partner for its needs. Investment banking company, J.P. Morgan, was eventually selected for its global network and, cash and liquidity management offerings.

In just over three months, this partnership enabled Agoda to build a roadmap for production, with a vigorous infrastructure that included opening close to 30 currency accounts across 12 bank branches globally.

With this network in place, Agoda developed an MT101 direct debit drawdown that allowed for automatic debit settlements to be made on specified value-dates. This was a critical step in ensuring all payments were made on time, avoiding any costly penalties.

Agoda’s decision to internally develop a virtual card self-issuance system is a monumental step in upgrading the technology and services provided by OTAs.

The success of this venture means that Agoda can now manage payments with its hotel partners easily and cost-effectively. This, in turn, helps to create a better ecosystem with accommodation partners while driving more consumer demand. Agoda will now be able to self-issue over 50 virtual card currencies, deepening FX conversion cost savings for like-for-like settlements.

Best practice and innovation

The launch of an in-house virtual card programme is just one example of the strategic vision employed by Agoda, as it continuously reinvents itself to stay at the forefront of the travel industry 4.0 reboot. Agoda’s Thailand-based treasury team played a big role in making this a success.

Key benefits

  • Applicable to a large global network.
  • Cost savings for both accommodation partners and consumers.
  • Simplified, optimised processing.
  • Certainty of settlements made accurate and in a timely manner.
  • Extended cut-off times.
  • Increase FX exchange rates for multiple currencies worldwide, enabling travellers to pay how and when they want.

Impact to consumers

Customers can now choose to pay how and when they want, and in their preferred currencies. The payment offering allows for great foreign exchange rates, which is possibly better than they what would get from their credit card or bank. Not to mention the ease of adding one more element to the customer booking journey, available on one seamless platform.

“Agoda, like the rest of the travel segment, was hard hit by COVID-19. During this difficult period, we set out to advance the treasury function by implementing the latest automated technologies (FIS Quantum TMS) and by adopting best practices in liquidity management, FX hedging and cash management solutions. To support Agoda’s virtual card self-issuing capability, we put in place a robust settlement programme that renders both cost-effectiveness and operational efficiency,” adds Paul Ritchie, Corporate Treasurer.

Ramesh Swamy

Managing Director and Head of APAC Treasury Services Sales for Corporate Client Banking & Specialized Industries (CCBSI) International
J.P. Morgan

“We are delighted to be associated with Agoda’s win on what is one of the industry’s most sophisticated virtual card self-issuance programmes. Both Agoda and J.P. Morgan share a strong partnership and commitment to invest in innovation, helping derive greater efficiencies in transitioning to a fully digitised treasury. This is just one example of how Agoda is driving firm-wide strategic initiatives and innovation to support its expanding global business, and we look forward to deepening our partnership with their treasury team in achieving more automation and operational efficiencies.”

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