Split Transactions
Situation
An online travel agency currently sells airline tickets, hotel rooms and vacation packages to destinations worldwide in US dollars only. The agency’s international suppliers are obliged to price and be paid in US dollars, and therefore suffering foreign exchange risks. International sales are lagging as a consequence of pricing exclusively in US dollars.
Objectives
The online travel agency is seeking ways to accelerate its growth. It recognizes that the ability to be more competitive and to expand its market are keys to growth, and thus defines this primary objectives:
- To allow international suppliers to price and receive payment in their own currencies, thus eliminating their exposure to foreign exchange risks and becoming much more “Supplier Friendly”
- To allow international customers to shop and pay in their own currencies, thus reducing barriers to purchase
- To accomplish both of these goals without assuming currency exposures or creating complexities
Strategy
Online travel agencies must deal with a fairly unique circumstance – customers, suppliers and the agency itself all want to do business in different currencies. Using E4X Split Transactions, E4X is able to effectively and efficiently manage this situation by facilitating:
- Suppliers pricing and receiving payment in their own currency
- Travelers shopping in their own domestic currency
- Online travel agencies pricing and receiving payment in their currency of choice
- Tracking of all 3 currencies, per single transaction using advanced reporting and accounting tools
Results
Overall results from the implementation of a strategy of this nature are typically:
- The elimination of foreign exchange risk for all parties
- Satisfied suppliers who are able to help build a more competitive position
- Rapidly growing international sales as a result of local currency pricing
- Implementation within just 30 days
