How virtual cards must evolve to overcome friction in travel industry payments
After years of volatility, 2024 was the year global tourism bounced back – almost. The UN’s World Tourism barometer confirmed a 98% recovery, signalling much-needed optimism and a big win for an industry heavily affected by recent global events and economic uncertainties. But while demand surges, many of the industry’s longstanding challenges remain, particularly around payments.
For online travel agents (OTAs), eager to scale operations and meet the increasing demand from travellers, virtual cards have been a key part of their success. They have allowed these businesses to keep up with resurgent demand while accessing the benefits of instant payments, streamlined and automated workflows, enhanced security, and reduced fraud.
In fact, according to Juniper, the total volume of virtual card transactions is set to grow to 175 billion by 2028, representing $13.8 trillion in transaction value. Clearly, virtual cards are here to stay in travel – but to truly unlock their full potential, they must continue evolving to drive greater efficiency and value for the entire ecosystem.
Solving travel’s payment puzzle
B2B payments in travel are notoriously complex, involving direct transactions, multiple intermediaries and aggregators, and layers of processing from booking to completion. This is partly due to the differing payment needs across the travel ecosystem.
Suppliers and OTAs manage thousands of payments, sometimes executed within a fraction of a second of each other. Because of this, payment systems are designed to handle large volumes – but they’re not always as smooth as they could be. Virtual cards have already made a significant impact, but there’s room to do more.
Part of that improvement will come from simply implementing the best practice and capabilities virtual cards can already offer. This might include embedding virtual card issuance directly into booking and payment platforms via APIs, to automate payments without relying on manual intervention. Or exploiting the rich supporting data card payments generate, which businesses can use to improve accounting or payment reconciliation and gain insights into buyer preferences and sales information for smarter planning.
When leveraged fully, virtual cards can save OTAs, travel sellers and other intermediaries time, trouble and cost, across authorisations, payment tracking and reconciliation. And for suppliers, they offer instant payment approvals and immediate trust, backed by globally recognised card networks.
The question is, how much further could virtual cards evolve – especially when you add embedded payments to the mix?
All for virtual cards and virtual cards for all
Our research showed that 91% of European OTAs and travel intermediaries don’t see any clear opportunities for business improvements with current payment methods. So, if virtual cards are to remain a long-term solution, they must evolve to truly serve the entire travel ecosystem more effectively.
One element of that could be the introduction of more flexible fee structures. A tiered or negotiable fee system could allow smaller suppliers to reduce transaction costs while maintaining the security and automation benefits of virtual cards. For high-volume transactions, reduced fees could be applied to ensure margins aren’t disproportionately squeezed.
Another potential avenue is deeper integration with existing payment platforms. Currently, many suppliers rely on separate systems to process virtual card payments, which can create additional administrative overheads and increase operational complexity. By embedding virtual card processing into broader financial workflows, suppliers can streamline operations and reduce hidden inefficiencies.
But the real game-changer will be better industry collaboration between OTAs, suppliers and payment providers, to adapt and evolve the way cards are used across the travel space. That will call for transparent conversations about cost structures. These discussions must be balanced against the clear and significant value in instant authorisation, automation, the ‘always-on’ nature of global card networks, and fraud protection that virtual cards offer to all parties.
Done right, virtual cards won’t just support travel’s resurgence – they’ll drive its future growth and add value across the entire travel ecosystem.
