The travel industry is booming. International tourist arrivals hit 1.4 billion globally in 2024 – an 11% increase over the previous year – driving record revenues of $1.9 trillion. But as demand surges, travel merchants face mounting challenges: rising costs, cross-border complexities, and increasing fraud threats. The way your business handles payments can determine whether you sink, swim, or head skyward.
The travel industry experiences seasonal spikes at different times in different regions, so payments flow steadily year-round. And gone are the days of overlooking payments as a revenue generator. Optimizing payment performance can increase conversion rates, reduce costs, and enhance customer satisfaction, making it the ultimate revenue-driving strategy.
I believe the travel sector has always been a pioneer of payments innovation and technology adoption, and we’re proud to be a partner in so many of these journeys. We’ve helped some of the biggest names in the business such as Holiday Extras, Etraveli Group, GetYourGuide, and Ticketmaster make waves with leading payments performance.
Why it’s so important to get your payments strategy right
The best and most sophisticated businesses in the world look at payments not just as a utility or cost center, but as a potential revenue driver. Think of the biggest Fortune 500 fintechs or OTAs – these businesses have huge payment organizations that recognize payments as the engine of growth.
“We need to move from looking at payments as a cost center to looking at payments as a profit center. Whether that’s monetization around the interchange, FX, offering financing products, or paying suppliers with virtual cards to get back some of the interchange.” – Alexandre Morin, Director of Payments, Risk & Fintech, Wego
If you do payments well and your customers have a positive experience, which often looks like giving them what they want before they even know what they want, then they’ll have much more inclination to pay.
You probably spend a lot of money acquiring customers. From Instagram and web ads attracting customers to your site, to keeping them engaged through the site experience, everything has a price. To make sure it’s all worth it, you’ve got to prioritize your payments too.
Overcoming the biggest payment challenges in travel & ticketing
Let’s face it, running a travel or ticketing business isn’t always smooth sailing. With so many moving parts, from international payments to last-minute cancellations, you’ll likely face a few hurdles. Luckily, with the right payments strategy, your business can jump over them and move forward efficiently.
1. The rising cost of travel
Travel is more expensive than ever. The question for travel merchants is: how do you continue capturing customers despite the higher costs? One of the best ways to overcome this challenge is to give customers flexible payment solutions that alleviate the financial burdens they may be facing.
Increasingly, customers are seeking options like buy now, pay later (BNPL) or split payments to manage costs. A report by leading travel provider Fliggy shows that booking volume for BNPL travel products in 2024 increased by over 20% compared to 2023, likely driven by rising costs. In fact, 75% of travelers will likely use BNPL to pay for future vacations. By offering BNPL, your business can increase its average basket size and improve conversion rates.
“When it comes to payments in travel, affordability is important to look at. If there’s anything around lending and installments that favors affordability – we need to offer it. Buy now, pay later is no longer a trend, it’s here to stay.” – Alexandre Morin, Director of Payments, Risk & Fintech, Wego
You can mitigate rising payment processing costs with intelligent payment routing, ensuring transactions are processed through the most cost-effective channels. Checkout.com’s AI-powered Intelligent Acceptance uses machine learning and flexible rules to do exactly this. And when your costs are reduced, your customers benefit too.
In Klarna’s 2024 Travel Report, 66% of Britons claimed to feel the pinch of the cost of living on their travel plans. It’s not all doom, gloom, and inaccessible prices though – despite the pinch, Britons were still choosing to prioritize travel, with 96% prepping for summer vacations. And according to Hilton’s 2024 Trends Report, 64% of global travelers aim to cut other areas of their personal spending to prioritize travel.
2. Cross-border complexity
Naturally, cross-border complexity is one of the greatest challenges facing payments in travel. Global connectivity post-COVID is at an all-time high, and businesses now have customers interacting with their website who never would have before.
Multi-currency support: As a travel business, supporting multi-currency payments is essential. Showing prices in a customer’s local currency builds trust, increases conversions, and avoids customers calculating the exchange rate or facing surprises at checkout; the price displayed is the price they pay. To back this up, 75% of travelers say it’s important to be able to purchase travel in their local currency.
FX fees: Multi-currency support brings foreign exchange (FX) fees that impact both travelers and businesses. As travelers grow savvier about hidden costs, transparency, like clearly showing FX fees or offering dynamic currency conversion, helps maintain trust. For businesses, managing FX exposure efficiently requires smart routing, reliable payment providers, and sometimes hedging strategies to protect against rate volatility. The ability to handle cross-border payments smoothly is no longer a nice-to-have, but a competitive necessity.
Local payment methods: The most popular ways to pay differ between countries, so localizing the payment methods you offer is also important. And whether customers have their preferred option or not can make or break a sale. In Asia-Pacific (APAC), consider digital wallets like Alipay and WeChat Pay, while in Europe, credit cards and Apple Pay reign supreme.
Compliance: Due to regional regulatory differences, another cross-border challenge is compliance. For example, the European Economic Area (EEA) and UK require transactions to be Strong Customer Authentication (SCA) compliant, but not the US. It can be a minefield understanding compliance laws across countries, but PSPs with local expertise can help.
Local acquiring
Local acquiring is the trick to top-tier payment performance – whether that’s increasing acceptance rates, reducing transaction costs, or minimizing cross-border declines.
When payments are processed through a local acquirer, transactions appear more familiar to issuers, reducing the likelihood of fraud-related rejections. This is particularly important in travel, where cross-border purchases are common and often flagged as suspicious.
Additionally, local acquiring helps you avoid higher interchange fees and currency conversion costs from international processing. By optimizing acceptance rates and lowering costs, it enhances the overall customer experience.
To benefit from local acquiring, your business needs to have a legal entity set up in the region and work with a PSP with a local license. Checkout.com has many acquiring licenses, serving customers domestically around the world, and offering regional expertise too.
“We’ve really focused on ensuring we have the right local payment methods, like Mada in Saudi Arabia and KNET in Kuwait. Checkout.com shares its expert insights to help us better understand the regional payment landscape, global best practices, and payment trends that aren’t yet in the region. At Seera Group, we like to be innovative, and Checkout.com is allowing this by sharing its views on what’s happening in payments around the world.” – Muzzammil Ahussain, CEO of Almosafer, a Seera Group company
3. Cart abandonment
With high-ticket transactions, like many travel and ticketing payments, abandoned carts are a major challenge. But as a business, this is one of the worst things that can happen – all those user acquisition costs wasted.
Customers abandon carts for many reasons, from latency issues to payment method preferences, or a complicated user experience to false declines. When “luxury” costs are involved, a small frustration can quickly become an excuse to abandon the transaction.
The fact is: the average cart abandonment rate for OTAs is approximately 81%. That’s high. Why give a bad payments experience as one more reason for customers to drop off?
Ways to avoid cart abandonment:
- Offer customers their preferred payment methods
- Make the checkout experience clean, intuitive, and mobile-optimized, e.g. with one-click payments using a product like Flow Remember Me
- Use smart payment routing to automatically send transactions through the most optimal network, reducing disruptions to the customer journey
- Improve fraud screening to minimize false declines
4. Fraud prevention
The travel industry is a prime target for fraud because of the high average transaction values (ATV). In 2023, it faced the second-highest rates of suspected fraud globally, with 36% of businesses reporting fraud-related issues. At the same time, travelers expect friction-free transactions.
Balancing effective fraud rules without being overly strict is crucial. Rules too tight can cause false declines of legitimate purchases and frustrate customers. Stay customer-focused – only use the fraud measures that fit your business. Tools like Transaction Risk Analysis (TRA) help enable smooth authentication for low-risk purchases while protecting high-value ones.
“Fraud is challenging for travel businesses with high ATV because not only are there high basket sizes, but low margins – so fraud is really hard to recover. We need advanced fraud capabilities to keep fraudsters away and facilitate smooth payments for our legitimate customers. If customers spend 20 minutes completing a booking and get a false positive at the end, we’ll never see those customers again on our platform.” – Alexandre Morin, Director of Payments, Risk & Fintech, Wego
Combatting fraud not only protects your business from direct fraud-related costs, it also strengthens customer trust and safeguards your brand’s reputation. To put it into perspective, 80% of travelers are somewhat concerned about the potential for payment-related fraud when traveling, while 23% are very concerned.
The types of fraud affecting the travel and ticketing industry most are:
- Credit/ debit card fraud
- Account takeovers
- Loyalty fraud
- Chargeback fraud/ friendly fraud
Travel and ticketing agencies often act as intermediaries between multiple partners, creating confusion over payment responsibility – something fraudsters exploit. OTAs, for example, must ensure cancelled flights don’t lead to chargebacks or fraudulent transactions don’t get reported to card schemes, maintaining proper refunds and communication with all parties in real time.
Network Tokens by Checkout.com are a great way to boost payment security and reduce fraud. They’re particularly good for merchant-initiated transactions (MITs) like flight changes and bookings because they stay valid even after a card expires, avoiding disruption to the payment flow. Fraud Detection Pro is our AI-powered fraud management tool that adapts to emerging fraud using a hybrid of rules and machine learning, helping you build a robust risk strategy.
A spotlight on issuing
Partnering with a PSP that’s both an acquirer and issuer offers unique advantages: deeper insights, greater control over the entire payment flow, and efficiencies in managing working capital. This translates to higher approval rates, faster resolutions, improved cash flow, and a smoother customer experience – so everyone wins.
The rise of virtual cards
Virtual cards have become a big trend in the travel space, especially among OTAs and business travel platforms. Sometimes called VCNs (virtual card number) or VCCs (virtual credit card), they are cards that only exist as a digital PAN and have no physical form.
The reason for their popularity is that intermediaries who receive funds from customers under the Merchant of Record (MoR) model can then use virtual cards to pay their suppliers. This offers protection for both the buyer and supplier in the form of payment guarantee and chargeback protection. They also give you more predictable FX costs, allowing you to issue cards in many different currencies and align these with the currencies you acquire funds in. There is the financial incentive of a potential interchange rebate.
The shift to the Merchant of Record model
Most OTAs, other travel intermediaries, and ticketing businesses receive funds from their customers under the MoR model, and then pay suppliers directly themselves.
But the MoR model wasn’t always the way it worked. Previously, travel intermediaries took customers’ card details and passed them on to hotels, airlines, etc., exposing customers to a security risk.
The move to the MoR model means customers pay the travel intermediary for the trip, making the intermediary responsible for delivering the service. If that service is unfulfilled, even if it’s out of the intermediary’s control – e.g., an airline goes bankrupt – a customer can still request a chargeback, and the intermediary is liable to pay. When virtual cards are used by the travel intermediary to pay the travel service provider, e.g. airline, they can also recuperate the funds in an adverse scenario, via a chargeback.
Here are just a few of the key advantages of the MoR model:
- Greater ownership of the customer thanks to capturing the payment directly
- More opportunity to cross-sell other services/ products
- Better payment security; card details aren’t being shared with another business
- Greater control due to various card restrictions
Previously, funds were acquired from the customer and sent via bank wire to the hotel weekly or monthly. The use of virtual cards means you can offer your suppliers speedier settlements compared to an old-school bank wire.
Checkout.com X Holiday Extras
“Our previous process involved making manual payments via batch bank wire to partners like Hilton, which was inefficient. Each supplier had unique requirements, which complicated the integration process. Ensuring consistency in payment processing across different currencies and jurisdictions was another layer of complexity. The integration [with Checkout.com] went really well.” – Michelle Taylor, Supplier Payments Team Lead, Holiday Extras
Checkout.com provided Holiday Extras with a virtual card issuing platform that smoothly integrated into its Hilton booking system. This brought significant benefits to Holiday Extras, from improved operational efficiency through booking and payment automation to financial gains through interchange fee kickbacks.
Issuing and fraud protection
The old way of passing on card details to the end merchant was inherently risky. Simply by enhancing this process, the MoR model has improved fraud protection in issuing.
For additional fraud protection measures, some issuers like Checkout.com will allow you to set card controls to mitigate the threat. With these controls, cards can be:
- Revoked
- Suspended
- Listed as active or inactive
- Locked to specific MCCs or Merchant IDs
- Subject to velocity limits
Looking at how this works, let’s say a customer has booked and paid for a hotel via an OTA. The official payment for the hotel isn’t due until a much later date, so the OTA can use an issued card that’s listed as inactive until the payment’s due. This reduces the risk of the card details being misused in the interim period until the customer has checked in.
Checkout.com’s issuing solution also uses a sophisticated fraud engine, which leverages machine learning to produce smarter risk decisioning.
Joining acquiring and issuing flows
Convenience and control: Partnering with a PSP that owns the whole payment lifecycle from payin to payout simplifies and improves the end-to-end process. You’ll get more convenience and control, dealing with only one vendor and provider for all your payment needs.
The problem with separate flows: Let’s zoom in on OTAs selling flights as an example. Given the risk profile of the OTA there is often the requirement to hold a reserve with their acquirer, which can create a significant capital burden when considering they may need to also pre-fund their issuer. In an industry of tight margins, this burden can have a significant impact on running and growing the business.
With back-to-back acquiring and issuing, the PSP handling both acquiring and issuing reduces its risk exposure, due to chargeback protection. The process looks more like this:
- A customer pays an OTA for flights
- The OTA buys the flight tickets from an airline using a card issued by its PSP
- In an adverse scenario, the PSP can chargeback its card transaction against the airline and recoup the money
Data: It also simplifies transaction reconciliation and data capture. With both acquiring and issuing on one platform, you can link the transactions and enrich them with detailed data, making analysis and reporting much more efficient.
Accelerated settlements: Using separate acquirers and issuers means you’ll have to wait a day (or more) between capturing the card payment and it being settled into your bank account. By joining the flows, PSPs can offer instant access to acquired funds because we know there’s guaranteed settlement from the scheme.
Issuing as a revenue generator
There is an attractive financial incentive from the use of virtual cards. The travel intermediary stands to earn a share of the interchange revenue received when transacting with virtual cards. This can offset your acquiring costs and more. This contrasts with other payment methods like bank wires, which can be cumbersome and costly.
“The 28% increase in acceptance rate delivered by Checkout.com has translated into a 5% uplift in monthly revenue. It’s also helped us reduce the cost of our payments.” – Rainbow Qin, Product Manager at GlobeTrotter Technology (operating as Qeeq.com)
What’s in store for payments in the travel and ticketing sector?
Faster refunds: From cancelled flights to changed minds, refunds are a large part of both travel and ticketing. It’s an industry defined by constant changes. And yet a general refund can take 3-5 business days. So the drive for faster refunds is inevitable, where refunds coming from the same card scheme can happen in real-time. Adopting faster refunds can be the answer to growing consumer demand and a revenue generator for your business.
BNPL: While we’ll definitely start to see more and more BNPL, it’s also high risk for the industry, and travel providers know it. But the appeal of payment installments for high-value transactions, especially holiday packages, to customers is hard to ignore. Being able to offer BNPL and split payments requires licenses (depending on the region), which is why many travel providers team up with PSPs equipped with these licenses.
Mobile optimization: There’s a whole generation of people who are buying plane tickets, concert tickets, and hotel reservations on their computers, but a large chunk of modern consumers are paying on their phones. Mobile had a 70.5% share of traffic on travel and hospitality websites worldwide in 2024. Ensure you have a UX/ UI that isn’t just web compatible, but also phone compatible.
“Historically, desktop was really big in travel because people wanted to browse comfortably on a big screen. But now it’s shrunk, and people are comfortable doing it on mobile, so businesses need to adapt and become mobile-first.” – Alexandre Morin, Director of Payments, Risk & Fintech, Wego
Drive smarter payments with Checkout.com
Our payments expertise across the travel and ticketing sector shines through in our products and services – from integration to account management. When you process payments with Checkout.com, you get a host of global payments information and support, including data and best practices, that you wouldn’t ordinarily have access to. Your customers will benefit from improvements to their experience as much as your finance and general teams will.
With Checkout.com, you get access to a wide range of settlement and FX currencies and the ability to freeze FX rates and day rates. Fluctuating currencies can impact your revenue and be difficult to reconcile, but freezing rates means you won’t have to battle with this – you can offer a certain rate to your customers and easily reconcile it on the backend.
Checkout.com’s dual-scheme partnership
In 2024, Checkout.com and Mastercard partnered to bring virtual cards to OTAs. Now, Checkout.com merchants can access the Mastercard Wholesale Program, unlocking reduced costs and higher conversion rates through virtual card technology and an innovative pricing model.
In 2025, Checkout.com and Visa also partnered to launch card issuing in the UK and Europe in a move to significantly enhance capital efficiency by eliminating pre-funding and accelerating cash flow.
By combining acquiring and issuing, Checkout.com helps OTAs transition smoothly from receiving customer payments to paying suppliers. Turning what used to be a cumbersome process into a cohesive, streamlined operation deepens trust and relationships within the ecosystem.
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