As the 2024 holiday season approaches, the US travel industry will see a rise in demand. Research suggests more than half of Americans plan to travel over Thanksgiving and the winter holidays. This surge will create valuable revenue opportunities for online travel agencies (OTAs), tour operators, and destination management companies. And now is the time for these businesses to look closely at their travel payment processing methods.

According to Airwallex and Skift's 2024 State of Payments in the Travel Industry, over two-thirds of travel executives find that complex payment systems hinder efficiency and profitability. As cross-border travel expands, OTAs need modern, flexible travel payment processing solutions to manage international transactions seamlessly and capture revenue from a global customer base.  

Read on to learn what OTAs should consider when choosing a payment processing solution ahead of a busy travel season.

In summary:

• The travel industry’s growth is a win for OTAs. However, increases in cross-border transactions can create issues across the payment lifecycle.

• OTAs must think globally and adopt travel payment processing solutions to handle multiple currencies and FX market volatility.

• Search for online travel payment processing solutions that provide easy payment collections in different currencies. They should also offer quick payouts to suppliers and vendors and clear and competitive foreign exchange rates.

• Airwallex's travel payment processing solutions allow OTAs to grow globally and transform their payment and financial operations. You can manage all your payment processes on one platform with an end-to-end payment solution.

What is travel payment processing?

Travel payment processing works through payment gateways (interfaces that collect consumer payment information). Merchants use this technology to accept travel purchases from customers using a debit or credit card. 

A payment gateway typically refers to two things:

• Card-reading devices in physical stores, commonly called point-of-sale (POS) terminals, which process in-store payments.

• Payment processing portals on websites, often referred to as “checkouts,” where customers enter their payment information for online purchases.

Payment processing for the travel industry can also include travel companies' payments to their vendors and suppliers. Examples of vendors and suppliers could include 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 a customer’s bank account to a merchant account. They help move money between the two. 

The payment gateway collects the customer’s payment information. Then, the payment processor uses that information. It takes the money from the customer’s account and credits it to the merchant.

How does travel payment processing work?

Travel payment processing involves facilitating financial transactions between OTAs and travelers who make bookings with them. It also includes making payments to the OTA’s suppliers and vendors across the globe. 

When a traveler books a hotel, flight, rental car, or tour, their payment information goes to the OTA's bank through a payment gateway. The OTA’s acquiring bank will then forward the payment to the traveler’s issuing bank for authorization. Once the funds are verified and approved, the payment is processed. The OTA’s systems usually send a confirmation to the traveler. This message shows that their booking is now complete. 

Travel payment processing is more complex than payments from other types of vendors. OTAs often deal with cross-border transactions, so currency conversion and fraud protection are especially important.

The growth of the travel industry is good for OTAs. However, more cross-border transactions can make payments more complicated. For example, collecting payments from customers and paying suppliers worldwide can make financial reconciliation harder. This can lead to high operating costs because of extra fees and staff time. 

In our 2024 State of Payments in the Travel Industry report, the travel executives we surveyed said they faced numerous travel payment processing challenges as they sought to drive brand differentiation and boost travel bookings globally. 

Some examples of these challenges include:

• Maneuvering through regulatory and banking system hurdles

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

• Avoiding high FX fees on cross-border transactions

• Streamlining supplier and vendor payouts across currencies

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

How is travel payment processing evolving?

Thanks to technology, travel payment processing has transformed significantly. At first, consumers preferred to pay with cash or checks, which meant they had to visit a travel agent or book by phone. In the 1950s, banks started using credit cards as a new payment method. This allowed businesses to accept credit card payments and gave consumers more options. Debit cards followed in the 1970s, further expanding payment options. Both methods made online bookings easier and sped up payments, helping businesses, consumers, travel agencies, hotels, airlines, and tour operators. 

Today, online bookings are the standard. OTAs use safe and reliable digital payment gateways to allow customers to pay quickly and securely when planning their trips.

Other payment solutions, such as digital wallets, contactless point-of-sale terminals, and peer-to-peer payment apps, have offered travelers even greater convenience and flexibility. With innovations in data encryption and fraud detection, OTAs and their customers benefit from more robust security and safeguarded financial information when booking online.

With all this change, if you’re an OTA wanting to stay ahead of the curve, you’ll want to invest in your travel payment processing technologies and financial operating systems.

In fact, 90 percent of travel executives Airwallex and Skift recently surveyed in the 2024 State of Payments in the Travel Industry report said they were “prioritizing upgrades to their payment and financial operating systems” – and it’s easy to see why. Creating smooth travel payment processes for customers is a great way to increase bookings and grow market reach.

Learn more about payment processing.

Core features for an online travel payment processing solution

Different OTAs have different needs regarding their travel payment processing solutions. However, some key features can greatly improve how businesses handle travel payments. Look for a provider that offers:

Multi-currency accounts

• Provides direct connections to local banks in one platform

• Allows payment collection from international customers in their preferred currencies and methods

• Enables fast international transfers to suppliers and vendors that leverage local payment rails versus

  SWIFT

• Comes with built-in fraud detection and robust compliance frameworks

FX management and margin protection

• Receive and pay out funds in the currencies you usually transact in with multi-currency accounts 

• Get competitive and clear FX rates. You can also lock in rates to handle currency changes in unstable markets.

Supplier and vendor payment reconciliation

Reconcile finances between customer bookings and supplier and vendor payments. This reconciliation simplifies automating data entry, matching transactions, and identifying discrepancies to help your OTA stay compliant.

Simple integration and automation

• Customize the checkout and payout experience through flexible and simple integration options 

• Integrate with popular accounting systems for seamless data syncing, so you’ll be up and running faster

• Automate key processes for more accurate reconciliation, reporting, and compliance

Features that promote new revenue streams

• Build and launch branded financial products for travelers, suppliers, and vendors

• Access revenue-sharing opportunities through FX markups and card interchange fees

Questions to ask an online travel payment processing provider

If you’re an OTA, whether large-scale or small-scale, 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 for online travel agency payment processing?

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

• What ongoing support do you provide?

• What payment methods do you accept, and what are your fees?

• Do you offer virtual cards for employee expense management?

How Airwallex’s financial platform meets your global ambition

A unified payment and financial operations platform is essential for managing travel payment processing. This is especially important as the travel industry grows. Consolidating your financial tech stack can help your OTA grow globally, improve profit margins, and compete with industry giants.

This is where Airwallex comes in. We’re the one-stop-shop for all your global financial operations.

Accept payments and process vendor payouts globally

With our platform, 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)

• Make local transfers to more than 150 countries 

• Accept payments from more than 180 countries

• Issue virtual multi-currency cards in more than 40 markets

Airwallex allows you to handle all your payments and payouts in one platform. You can easily manage your multi-currency balances and expenses. Our platform also offers competitive FX rates, allowing you to earn valuable interchange rebates.

Sound like something that would revolutionize how your OTA manages travel payment processing?

With more than 100,000 companies around the world trusting Airwallex’s software and APIs to simplify their financial operations, we want to help your travel business unlock new opportunities and grow without limits.

Sign up for free, and see how Airwallex can help your travel business.