Agoda story header

7 min read

Key takeaways

  • Agoda sought to build a new in-house card issuance operation and create an entire infrastructure across multiple markets from scratch that could internalize payment and data exchange processes with the network provider to facilitate timely settlements.
  • J.P. Morgan helped Agoda implement a comprehensive infrastructure to achieve greater certainty of settlement, an API Plugin solution to assist with real-time access to payments information, and incorporated intraday overdraft facilities to meet payment obligations.
  • As a result, the virtual card solution enabled scope expansion for settlement currencies, reduced costs, and reduction of working hours per month.

Adam Smith Awards Asia 2021 Podcast Best Card

The Adam Smith Awards Asia are recognised as the industry benchmark for best practise and innovation in corporate treasury. Throughout this dedicated series, we take a deep dive into each of the winning solutions of 2021 in conversation with the creators themselves.

Hello, I'm Meg Coates Joint Publisher and Head of Operations at the Treasury Today Group. In this episode, we take a look at the overall and highly commended winners in our best Card/E-cash solution. This is another new category for 2021 to not only encompass cards, but to recognise the emerging cash replacement solutions such as E cash, digital currencies and E wallets.

Now it's time for me to move onto our Best Card Solution. And the Overall Winner of Our best card Solution is Ekkaphap Thengtrirat, Senior Banking Solutions Manager at Agoda, congratulations.

Hi, my name is Ekkaphap Thengtrirat, Senior Banking Solutions Manager at Agoda’s Treasury team. Our company is the Overall Winner of the Adam Smith Awards Asia 2021Best Card Solution category. A quick introduction on Agoda. As one of the world's fastest growing online travel agencies and a part of NASDAQ listed Booking Holdings Incorporated, Agoda provides a digital travel platform that connects travellers to a global network of 2.9 million hotels and holiday properties in more than 200 countries and territories around the world. Headquartered in Singapore, with global operations based in Thailand, Agoda employs more than 4,000 staff in 25 markets with a mission to make travel easier for everyone. Our all-in-one booking platform offers travellers easy access to a wide choice of hotel and hotel accommodations to suit all budgets and travel locations as well as other travel related services such as flights, airport transfers, travel packages and rental cars.

First of all, our team is deeply honoured to have received this prestigious Adam Smith Award this year, despite the fierce competition from a record-breaking number of submissions, we are pleased to be the inaugural winner of the Best Card solution category as Asia's leading travel tech company. We take pride in the state-of-the-art technology offered on Agoda platforms to provide the best possible travel experience for our customers. To be recognised for efforts in the fintech space is a true testament to the dedication and hard work of our finance, treasury, product, and commercial teams. As an intermediary in the travel value chain, Agoda, like many other players in the industry, was severely impacted by the COVID-19 pandemic. To weather the storm and survive the crisis all parts of the Agoda Organisation, including treasury, were looked upon to focus our resources towards pursuing optimisation projects. We wanted to ensure that we were diversifying and improving our solutions to prepare for the challenges ahead. About two years ago, we rolled out our product that would effectively allow us to be a payment processor for our accommodation partners. We would put our own boss into hotels so they could process customer credit cards through the reel effectively that was set up by Agoda. The idea was that this would save hotels a fair amount of money by doing so. This turned out to be a tricky endeavour from a regulatory point of view and the profitability was also less than we expected for the time and investment put in. It took the entire team time and research to creatively think about how to power this product we already had a version for and power it into a new fintech project that would be more cost effective and beneficial form all partners. Essentially, we took what was meant to be an external product for hotels and turned it to be an internal product that sits within our ecosystem, but it still uses a lot of the same underlying expertise.

In the first quarter of 2020 our product and commercial teams initiated a working relationship with the selected credit card scheme partner and a third-party card processor to design, build and develop necessary infrastructure and end to end workflows to enable Agoda card issuing capability. The fund settlement site was managed by myself and the treasury team. We implemented a partnership with J.P. Morgan to cater for a business needs best fit to the payment ecosystem we have built and operated in, that is hotel payment via virtual card. Together with my team, we envisioned a road map to build and implement our goals. One key criteria was to manage funding and daily settlement operations to the credit card scheme for almost 30 settlement currencies. We wanted to be able to run this process daily in a timely, cost effective and operationally efficient manner. And to test the boundaries of the extent of which it was possible, leveraging the diverse expertise of the Agoda team members and a global network and all the benefits that come from partnering with J.P. Morgan, we managed to lead an efficient implementation programme, which was completed within just three months. This meant our company’s internal target launch timing of September 2020. We remain grateful to be unwavering commitment of our partners and the team in actualising this.

My key takeaway from this is that you never know what the life cycle of a product or an idea can be. We sited this journey two years ago with a different team looking to tackle the issue of streamlining our payment offerings in a very different way and we took those learnings on and built on them to make a new iteration of a product that will help serve our customers and accommodation partners better. A key element in a Agoda’s culture is a constant test and learn mindset, to constantly think of innovating for the next big thing. I'm proud to be a part of an organisation that offers great support and encourages all its staff to the pursue projects and out-of-the-box thinking. The possibilities for learning and innovating are endless. So, always keep dreaming.

And now it's time for a word from their partner.

Hi, my name is Kylla Fu and I’m the Regional Banker covering Agoda at J.P. Morgan. In early 2020 when Agoda first shared their plans to get licenced by a card scheme to set up their virtual card self-issuance programme, we were excited by the firmwide strategic initiative to help their business expand the number of like for like currencies for settlement or payment obligations to hotel partners. We understand that building a new card issuance operation from global business is a massive undertaking, hence J.P. Morgan is committed to the cause to help them blueprint from the ground up an entirely new infrastructure across multiple markets to internalise payment and data exchange processes with the card scheme.

The set-up of a global account structure help with J.P. Morgan forms a foundational base that underpins the core funding and settlement aspects that Agoda would need to consider in operational workflow. We understand that one of Agoda’s key requirements is to achieve simplification of an otherwise complex workflow, hence we introduce our automated MT101 drawdown facility viable transfers that would automatically debit the card scheme settlement amount from Agoda’s accounts on validate. This ensures seamless processing of these payments without hiccup. In addition, in partnership with J.P. Morgan, Agoda was successful in leveraging relationships with the local regulators in certain highly regulated markets to overcome challenges applicable to the firm as a non-resident account order in this location. J.P. Morgan is vested in the success of our clients and we are glad to have the opportunity to work with Agoda to provide a solution centred on automation and operational efficiencies to ensure the success of Agodas virtual card issuance programme. A couple of things make this a winning solution.

First, the scope and level of sophistication of Agoda’s settlement programme is understood to be one of the most advanced among all of the card schemes network members. Given the global nature of the project, covering multiple markets and currencies, achieving automation and operational efficiencies are key considerations behind delivering this winning solution. J.P. Morgan’s automated MT101 drawdown solution has not only helped Agoda achieve its core objective of fully automating the daily payment settlements to the card scheme, but also demonstrates best practise in alleviating the pressure on Agoda to manage payment initiation in a timely manner else risk very costly non-compliance penalties. This solution delivered so much value to Agoda that it called for a tripartite collaboration amongst Agoda, J.P. Morgan and a card scheme to expand this automated solution to cover a handful of currencies not yet using this automated programme at the outset of go live. Achieving greater certainty of settlement is another key benefit that J.P. Morgan is able to bring to Agoda given our experiences a settlement bank for the card networks schemes. By utilising book transfers to settle funds to the card scheme to MT101 drawdown instructions Agoda is able to reduce potential notes of failure that could occur when the payment goes through the whole clearing. And also to avail of extended cut off times in the event a manual ad hoc payment is required.

A huge congratulations to all our Adam Smith Award Asia 2021 winners. Thank you for listening to this episode of our dedicated Adam Smith Awards Asia Podcast series, brought to you by the Treasury Today Group. More episodes will be coming soon featuring over award-winning solutions, so please subscribe to our channel so you can stay updated wherever you get your podcasts from.

About (Agoda) is a leading online travel agency for more than 2.4 million hotels and vacation rentals around the world, as well as flights and airport transfers. 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.

The challenge

As an online travel platform provider connecting bookers with hotel partners, Agoda receives proceeds from travel bookings to settle its payment obligations with hotel partners via two channels: virtual cards and bank transfers.

Previously, settlement via virtual cards was outsourced to a third-party vendor. In early 2020, Agoda embarked on a major shift towards a virtual card self-issuance model, licensed by a global card network provider. This firm-wide strategic initiative helped the business expand its breadth of coverage from 14 to 27 like-for-like settlement currencies to extract greater economic benefits from cost savings.

Agoda sought to build a new in-house card issuance operation and create an entire infrastructure across multiple markets from scratch that could internalize payment and data exchange processes with the network provider to facilitate timely settlements.

The solution

The in-house virtual card program’s success involved optimizing Agoda’s payment settlements to the global card network provider. Agoda engaged J.P. Morgan for the initiative to leverage the bank’s strength as a core settlement bank for the network provider.

In just over three months, J.P. Morgan helped Agoda blueprint a roadmap to support this new operation and implement a comprehensive infrastructure that included opening 27 currency accounts across 12 J.P. Morgan branches globally, including APAC, the UK, the US and Canada.

By leveraging J.P. Morgan’s deep expertise of the global card network provider’s end-to-end settlement process, Agoda implemented an automated MT101 drawdown facility via book transfers that automatically debits its account on value-date. This was critical as Agoda would otherwise have to manually initiate funds transfers according to daily advisement reports for all 27 settlement currencies; any late payments were subject to penalties.

The MT101 drawdown facility tool helped Agoda:

  • Achieve greater certainty of settlement
  • Reduce potential nodes of failures that could occur when a payment goes through local clearing
  • Benefit from extended cut-off times in the event that ad-hoc manual payment is required

Meanwhile, Agoda also implemented J.P. Morgan’s Excel API Plugin solution for real-time access to information on its outgoing and incoming payments and global cash positions. With immediate visibility of debits via transaction reference IDs, Agoda could instantaneously confirm if funds reached the network provider to then discharge its settlement obligations.

J.P. Morgan also helped Agoda incorporate intraday overdraft facilities to ensure that accounts could meet payment obligations in the event of shortfalls. To fulfil its FX requirements, Agoda leaned on J.P. Morgan’s dealing desks in Singapore, Thailand and Malaysia to fund its accounts used for local card network provider settlements, while leveraging a pre-agreed competitive FX pricing agreement with J.P. Morgan for markets with smaller volumes.

"To support Agoda’s virtual card self-issuing capability, we put in place a robust settlement program that renders both cost-effectiveness and operational efficiency. This is part of Agoda’s ongoing attempt to grow and diversify payment systems and offer both customers and partners further ease in transacting with us."

The results

The in-house virtual card operation enabled Agoda to:

  • Expand its scope of settlement currencies

    from 14 to 27 in order to better manage their FX exposures

  • Reduced costs

    associated with FX risks born through previous USD card issuance by utilizing an outsourced vendor

  • Save up to 30 work hours per month

    which would otherwise be spent in consuming the settlement advisement reports and handling the payment initiation process 

With Agoda’s treasury team putting in place the infrastructural backbone to support the global card network provider program, Agoda can also benefit from bringing the issuance in-house to derive cost savings and open up a new source of revenue stream.

"This is just one example of how Agoda is driving firm-wide strategic initiatives and innovation to support its expanding global business. We look forward to deepening our partnership with their treasury team in achieving more automation and operational efficiencies."

To learn more about how we can support your business, please contact your J.P. Morgan representative.


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