Amadeus launched on Wednesday a currency conversion module aimed at travel businesses, with Citibank being the first foreign exchange provider to take part.
“Being able to simplify local currency pricing solutions in the aviation sector has always been a key gap in the industry,” said Flavio Figueiredo, global head of rates and currencies, corporate sales at Citibank.
Amadeus aims the tool, called FX Box, at airlines, large travel agencies, global hotel companies, and other travel companies that sell to many international consumers. Today, travel companies typically let third parties handle currency conversion, often via integrations through payment gateways. For every foreign transaction, a third-party provider will add a markup on interbank rates.
Amadeus said its model is different. It lets the merchant control the base interbank rates it wants to apply by selecting from partners such as Citibank.
The merchant can then choose how much markup to put on the base rates. The markup a travel company sets could represent “incremental revenue of up to several percentage points” on transactions, Amadeus said.
“We work here first with Citibank, which, as you can imagine, has extremely good core rates being used underneath,” said Bart Tompkins, head of payments at Amadeus. “We plan to bring in more banks. Different banks may have better rates in certain markets. The intention is that a travel company could work with three or four different banks to get the best rates in all the regions they serve… They have to sign an agreement with each bank.”
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Amadeus said it would offer transparency by helping travel companies compare the interbank rates being offered against benchmark rates from sources like the European Central Bank or Reuters.
Migrating to Amadeus’s system promises more control for the airline, hotel group, or other travel company, the company said.
“Centralizing your information helps you with payments optimization and improving conversion,” said Nicolas Ortiz, head of payment product innovation at Amadeus. “With old systems, you have to go and get data from your FX provider and then match it with your travel information and then try to infer business insights from there.”
“The more you can look at your data together, you can see consumer reactions,” Tompkins said. “You make a slight change to your markup or your pricing, and you see immediately what happens in terms of your sales. A travel company would be going from a situation where they have a system to give exchange rate services where they wouldn’t have much input into it to one where they have much more control.”
Another aspect of Amadeus’s FX Box is to improve a travel company’s back-office efficiency related to currency exchange. The tool is integrated into Amadeus’ payment platform, uniting foreign exchange and travel data. The goal is to streamline revenue accounting, reconciliation, and reporting.
In recent years, much buzz has gathered around upstart tech vendors that have made a lunge for the financial services wallet. But regulation and other factors have largely insulated banks from competition. Some business-to-business payments companies such as Airwallex and eNett have provided pricing competition to banks when it comes to cross-border transactions and currency exchange. But consumer-facing transactions have escaped much innovation so far.
Yet that may change, as more “big tech” players like Alphabet (Google), Amazon, and Apple experiment with offering financial services.
Photo Credit: Currency exchange rates on digital LED display board before the pandemic. Amadeus launched on Wednesday a currency conversion module aimed at travel companies, with Citibank being the first foreign exchange provider. Adobe
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