The world’s love for travel is reaching new historic highs in 2024. According to UN tourism, global tourism is expected to increase by more than 15% this year compared to the previous year, surpassing pre-pandemic figures.¹ In Singapore alone, residents took approximately 7.87 million outbound flights in 2023,² and 78% of Singapore travellers used an online travel agency (OTA) like Agoda.³

This expansion of global travel is a welcome boost for tour operators and OTAs. In fact, according to the 2024 State of Payments in the Travel Industry, a joint report by Airwallex and Skift, 75% of the 500 global travel executives reported that they earned over one-quarter of their revenue from cross-border payments. 

The survey also revealed that more than two-thirds of travel finance executives said outdated or complex payment systems are negatively affecting their organisation's efficiency and profit margins.

To take full advantage of the travel boom, OTAs need to think strategically about their international payments. Here’s what you need to know about choosing a modern payment processor, and why Airwallex’s end-to-end payment solution and competitive fees can help you scale your OTA.

In summary:

• Although the travel industry’s growth is a win for OTAs, increases in cross-border transactions amplify many issues across the payment lifecycle.

• In this environment, OTAs need to think globally and adopt travel payment processing solutions that can handle different currencies and FX market volatility.

• Core features for great online travel payment processing solutions include seamless payment collections in multiple currencies, fast payouts to suppliers and vendors, and transparent and competitive FX rates.

• Airwallex allows OTAs of all sizes to grow globally and revolutionise their payment and financial operations with its travel payment processing solutions. By using an end-to-end payment solution, you can keep all of your payment processes in a single platform while improving your profit margins.

Read Airwallex and Skift’s latest research report, 2024 State of Payments in the Travel Industry, to find out why leading travel companies are adopting end-to-end payment systems such as Airwallex for their travel payment processing needs. 

What is travel payment processing?

Travel payment processing is completed through payment gateways, a secure technology that lets you accept customer payments from cards, digital wallets, and other cashless payment methods. This technology powers the “checkout” pages of eCommerce stores and OTAs.

Travel payment processing can also involve the outbound payouts made by travel companies to their vendors and suppliers like tour providers, airlines and hotels. 

Payment gateway vs. payment processor

One distinction to make is that travel payment processing gateways are different from ‘payment processors’. Payment processors are services that link the customer’s bank to the merchant account, making the transfer of money possible. 

Think of it as two halves. The payment gateway collects your customer's payment details, and the payment processor uses that information to withdraw money from the customer's account. 

The processor then transfers the funds to your merchant account using an acquirer - a provider that manages merchant accounts, handles transaction approval and settlement with banks, and takes on the risk of chargebacks, fraud, and disputes.. 

How it looks: Payment processing

Some payment providers can handle several roles in the payment process. For example, Airwallex is a gateway, processor, and acquirer all in one. 

How does travel payment processing work?

Travel payment processing involves facilitating financial transactions between OTAs and their customers. . It also includes making payments to the OTA’s suppliers and vendors across the globe. 

Whether it’s a hotel, flight, rental car, tour or other travel-related booking, the traveller’s payment information is transmitted through a payment gateway to the OTA’s business account. The OTA’s acquirer  will then forward the payment to the traveller’s issuing bank for authorisation. 

Once the funds have been verified and approved, the payment is processed and the OTA will notify the traveller that their booking is confirmed. 

Although the travel industry’s growth is a win for OTAs, the growing volume of international payments can complicate operations. Travel payment processing is more complex than other types of payments. In our 2024 State of Payments in the Travel Industry report, the travel executives we surveyed said they faced several challenges as they sought to drive brand differentiation and boost travel bookings globally. 

Some examples of these challenges included:

• Avoiding high FX fees on cross-border transactions

• Manoeuvring through regulatory and banking system hurdles

• Finding solutions for offering local payments to a growing global customer base

• Streamlining supplier and vendor payouts across currencies

• Accurately reconciling bookings, payments, commissions, and refunds across multiple fragmented systems

How is travel payment processing evolving?

Today, online bookings are now standard. Airwallex and Skift’s report shows that credit or debit cards remain the most common payment method used by travel customers, followed by electronic bank transfers. 

However, mobile wallet usage is becoming increasingly popular in Asia, with WeChat and AliPay dominating China’s cashless economy⁴ and GrabPay forecasted to reach 10 million users by 2025.⁵ Travel industry executives surveyed by Airwallex and Skift also reported that 32% of their customers often use local payment methods.  

With changing consumer preferences, OTAs should invest in financial systems that support popular and alternative payment methods. In fact, 48% percent of travel executives surveyed by Airwallex and Skift said they had issues with cart abandonment, which is likely to happen when customers don’t see their preferred payment method at checkout. . The right payment processor can increase bookings and help you reach new markets by offering localised checkout experiences. 

Core features for an online travel payment processing solution

Localising the customer experience also means displaying prices in local currency. But, OTAs need to be equipped to handle foreign exchange fluctuations and currency exchange fees. 67% of travel executives interviewed by Airwallex and Skift reported that cross-border payments have become increasingly challenging due to foreign exchange volatility. 

The right payment partners can help OTAs manage foreign exchange risk with the following features: 

• Multi-currency accounts. Accept and hold leading foreign currencies, and pay out suppliers in those same currencies to avoid unnecessary conversion.

• FX management. Access competitive and transparent FX rates with the option to lock in your preferred exchange rates.

The travel industry also faces a high risk of chargeback and payment disputes, which can be expensive to resolve. A payments solution should reduce this with features like:

• Built-in fraud prevention. Automatically detect suspicious transactions and minimise chargebacks with integrated fraud detection .

• Customisable risk engine. Tailor your risk settings to protect against fraud without reducing your acceptances. 

Finally, a payment partner can add value by simplifying key finance processes like:

• Supplier and vendor payment reconciliation. Save time with a payment system that lets you automate data entry, match transactions, and identify discrepancies.

• Accounting. Integrate with popular accounting software like Xero, for seamless data syncing.

Questions to ask an online travel payment processing provider

If you’re an OTA, choosing the right travel payment processing provider is your key to scaling globally. To keep a competitive edge, here are the questions you should ask when considering a travel payment processing provider:

• Do you offer multi-currency payment processing?

• How do you manage your FX rates? Are they competitive and transparent? 

• What reporting features does your platform offer?

• What security features does your platform include?

• What’s the integration process with our existing systems, such as our booking systems and CRM tools?

• How quickly can we set up the platform?

• Can we manage all payment processes and financial operations via one interface, or are there multiple?

• What ongoing support do you provide?

• What are your fees?

• Do you offer virtual cards for employee expense management?

How Airwallex’s end-to-end payment solution can help your OTA scale 

To solve the complex challenges of travel payment processing, you need a unified platform that offers a secure payment gateway, payment processing, and multi-currency accounts. 

This is where Airwallex comes in. We offer an end-to-end payment platform that enables payment processing, international transfers, and multi-currency payouts to suppliers.  

With Airwallex, you can: 

• Open an account in more than 60 countries with local bank details (so you don’t have to set up local entities manually)

• Accept payments from customers in 180+ countries and 160+ local payment methods, such as Alipay in China.

• Get like-to-like settlement in 11 currencies. This means you can accept and hold foreign currencies like USD, and pay out to suppliers in that same currency.

• Reduce foreign exchange risk with interbank exchange rates and risk management solutions

• Empower your team to handle company expenses by instantly issuing virtual multi-currency cards  

Case study: How EU Holidays boosted profit margins with Airwallex

Singapore travel agency EU Holidays faced significant challenges with international payments, especially as their business grew. As they offered more destinations, they had to pay more international vendors. Banks charged high fees on each transaction, cutting into their profits.

Using Airwallex helped EU Holidays increase their profit margins by 30 points. They could pay overseas suppliers in their local currencies using Airwallex’s network of local payment rails. This helped the company avoid high SWIFT fees. 

“Our growth story isn’t one of survival; it’s about thinking creatively and using technology to maximise our profits,” says Alan Ang, Director of EU Holidays. “With Airwallex by our side, we've streamlined operations and increased margins without layoffs or compromising on service quality.”

Ready to overcome the challenges of travel payment processing like EU Holidays? Create an Airwallex account today and take your OTA to new heights.

Sources:

1. https://www.unwto.org/tourism-data/un-tourism-tourism-dashboard

2. https://www.statista.com/statistics/755762/outbound-departures-singaporean-residents-mode-of-transport/

3. https://www.statista.com/statistics/1200989/singapore-online-travel-agency-usage/

4. https://www.channelnewsasia.com/east-asia/china-mobile-payment-wechat-alipay-4659226

5. https://www.statista.com/statistics/1271716/mobile-wallet-user-forecast-in-singapore/

This publication does not constitute legal, tax, or professional advice from Airwallex nor substitute seeking such advice, and makes no express or implied representations / warranties / guarantees regarding content accuracy, completeness, or currency. If you would like to request an update, feel free to contact us at [[email protected]]. Airwallex (Singapore) Pte. Ltd. (201626561Z) is licensed as a Major Payment Institution and regulated by the Monetary Authority of Singapore.