Payment processing for the travel industry: a complete guide

Payment processing is key for travel businesses that want to deliver flawless booking experiences to a global audience. With transactions happening across different currencies, methods, and sales channels, having a streamlined and secure payment system is not just important — it’s your ticket to success. In the modern travel world, if customers can't pay conveniently, they probably won't do it at all.

This guide covers the essential aspects of payment processing tailored to the unique needs of the travel industry — from understanding core concepts to implementing robust solutions that elevate the customer journey.

Understanding payment processing

Payment processing is the sequence of steps that ensure the safe money transfer from a customer to a merchant during a purchase. For travel businesses, having a seamless payment process is crucial because it allows you to accept payments from customers worldwide for services like flights, hotel bookings, rental cars, tour packages, and more.

This process typically involves the customer, the merchant, and their banks, along with a payment processor and payment gateway that handles the technical and safety aspects of transactions. The main aim is to securely complete transactions, making sure that the merchant receives payment for the services provided and the customer is charged correctly.

Several popular payment methods have become essential for travel companies to support:

• Credit and debit cards. Still the most common choice, customers expect the ability to pay with Visa, Mastercard, American Express, and other major credit card brands.

• Digital wallets. Solutions like Apple Pay, Google Pay, and Samsung Pay are seeing increasing adoption for convenience and security.

• Bank transfers and ACH. Especially popular in some regions, bank transfers offer a secure way for customers to make direct payments from their accounts.

• Buy Now, Pay Later. Emerging financing options like Klarna, Affirm, and Zip allow customers to pay for trips in installments, attracting a broader range of travelers.

Each payment method has rules, processes, and requirements that travel merchants must follow.

Merchant account

To accept credit cards and any other type of electronic payments, travel companies need to set up a special type of bank account called a merchant account. This specialized account serves as a holding area for funds from customer transactions before they are moved to the company's main business account.

It works as an intermediary, ensuring that funds from processed transactions are deposited into the merchant account instantly. When a company applies for a merchant account, many banks consider factors such as the type of business, processing volumes, risk profile, and other relevant details.

Gateways and processors

At the core of any payment process are two key components — the payment gateway and the payment processor:

• Payment gateway. This is the customer-facing technology that collects and securely transmits transaction data between the customer, the merchant website/app, and the processor. It handles sensitive card details, encryption, and relays authorization requests.

• Payment processor. Processors are the behind-the-scenes entities that receive transaction details from the gateway, verify and approve them by communicating with the customer's bank/card network, and facilitate the money movement.

For travel agencies and tour operators, integrating the right payment gateway is crucial, as it acts as the bridge connecting your services to customers' preferred methods in a seamless, PCI-compliant manner.

Challenges in the travel industry payment processing

Making payments easy is essential for travel businesses, but they also deal with specific problems that need smart planning and action:

• High chargeback rates. Chargebacks, where clients dispute transactions they've made, happen more often in travel than in other industries. Things like last-minute cancellations, flights being delayed or canceled, bookings that don't match up, and friendly fraud lead to more chargebacks. This impacts revenue, processing costs, and might even result in merchant accounts being frozen or even closed.

• Cross-border transactions. Dealing with international payments is key for travel businesses that serve clients worldwide. They need to handle payments in different countries and currencies, which brings challenges like changes in exchange rates, following tax laws, spotting fraud in various payment systems, and knowing the preferred payment methods in each country.

• Currency exchange. Volatile exchange rates can quickly cause differences in prices from what clients expect when they book to what they are charged after the money is converted. Offering prices in the local currency and keeping up with changing exchange rates are important to prevent unpleasant surprises in costs.

These challenges affect more than just financial aspects. High chargebacks reduce profits and can lead to higher fees from payment processing solutions. Issues with international payments can make the checkout process difficult for customers from other countries when booking a trip. Poor handling of currency exchange can make customers lose trust and loyalty.

On the bright side, modern payment solutions and services are specifically designed to solve these issues for the travel industry. By adopting robust strategies like 3D Secure 2, intelligent routing, travel-specific data tokenization, and, most importantly, working with payment processors that know the travel industry well, companies can get past these obstacles and offer an easy payment process to clients worldwide.

Choosing the right payment gateway

In today's worldwide travel market, picking the correct payment gateway is a choice that greatly affects your business's success. When looking at possible providers, it's important to focus on several main features to make sure the payment process is smooth and follows the rules.

• Security and fraud prevention. As a travel company handling sensitive financial data, focusing on robust security measures should be your highest priority. Look for payment gateways that employ advanced encryption techniques, tokenization, and fraud detection tools to safeguard customer information and reduce the high risk of chargebacks and fraudulent activities.

• Currencies and payment methods supported. Supporting different currencies and methods is also key when serving customers worldwide. Look for gateways that let you price in multiple currencies and accept common payment options like credit and debit cards, digital wallets, integrations with Buy Now Pay Later providers, and bank transfers, especially those preferred in your target markets.

• Cost of processing payments. Payment processing fees can quickly add up, impacting your bottom line. Evaluate the pricing models offered by different gateways, considering factors like transaction and service fees, setup costs, and any additional charges for advanced features or higher processing volumes. Striking a balance between cost-effectiveness and functionality is crucial.

• Ease of integration. A seamless integration process is essential for a hassle-free implementation. Assess the gateway's developer resources, including comprehensive documentation, API references, and support for industry-specific requirements. Additionally, consider partnering with experienced development teams like Zoftify, which specializes in payment gateway integrations, to ensure a smooth and correct setup.

Top players

In the travel industry, several payment processing providers have established themselves as top contenders, offering tailored solutions to meet the unique needs of the sector.

Stripe

One of the pioneers in the payment processing space, Stripe caters to large and small businesses with a wide array of tools and services. Supporting over 135 currencies, Stripe enhances its global accessibility and ease of use in international markets. For travel companies, Stripe's platform provides critical features like intelligent routing for cross-border transactions, advanced chargeback, fraud protection using machine learning, and support for popular digital wallets and Buy Now, Pay Later options. Their developer-friendly APIs and comprehensive documentation make integration relatively straightforward.

Flywire

Flywire is a dedicated payment solution provider for education, travel, and business sectors. Their travel-specific offerings include multi-currency pricing capabilities that dynamically update based on exchange rates, making sure customers always see prices in their local currency. Flywire's intelligent routing optimizes payment paths for international transactions, reducing declines and processing costs, while adding an extra layer of security. They also offer localized payment method options tailored to over 240 countries and regions.

Adyen

With a strong focus on the enterprise market, Adyen's platform is designed to handle high volumes of credit card transactions across multiple sales channels. Their unified commerce solution supports over 250 payment methods and 150 currencies, making it well-suited for travel businesses with a global client base. Adyen's risk management tools leverage machine learning to detect and prevent fraud, while their revenue optimization suite helps maximize authorization rates. They also provide advanced mobile payment capabilities with support for digital wallets and alternative payment methods like QR codes.

Integration and implementation

With a solid understanding of payment processing and its specific challenges in the travel industry, the next big step is to add the right gateway to your platform. This integration is foundational for securely accepting payments from your customers.

The payment gateway integration process usually includes these important steps:

1. Research and choose a provider

Carefully evaluate different providers and gateways to see which match your business needs. Consider the supported payment methods, pricing models, travel industry expertise, third-party integration capabilities, and security measures. Shortlist two or three options.

2. Review the technical documentation

Go through the provider's developer documentation, API references, integration guides, and documentation detailing specific requirements for the travel industry. Identify if there's anything extra you need to do or if you might need additional services.

3. Bring in a development team

Payment gateway integrations require serious technical capabilities that go beyond just coding. There's more than meets the eye when it comes to aspects like PCI compliance, security best practices, future-proofing for new payment trends, and more. That's why it's wise to work with a skilled, experienced development team like Zoftify that specializes in travel payment integrations to to make sure everything is set up well.

4. Set up your account

Work with the payment partner to finish any necessary paperwork or boarding processes to get credentials like API keys and merchant IDs. And don't forget to set up a production-ready travel merchant account.

5. Develop and integrate

Implement the provider's API or SDKs into your booking system, travel app, or designated payment modules within your tech stack. Make sure to follow coding best practices, security guidelines, and test everything thoroughly.

6. Get approved

Some providers mandate that integrations go through a certification process to ensure they meet specification requirements and compliance standards before going live.

7. Deploy and monitor

Once certified, you can begin processing live transactions. However, continue monitoring transaction success rates, declines, errors, and any other issues in the initial period post-launch.

Best practices

While following the step-by-step integration process is important, making sure your payment system is successful and future-proof involves adhering to some key best practices. These guidelines help you make the most of your investment, provide great experiences for customers, and stay ahead in the industry.

• Start early and give yourself plenty of time for a smooth integration so you're ready for any unexpected problems. Even small hiccups can cause costly delays if you're not prepared. Beginning the process early gives you the extra time needed to handle complex issues.

• Make sure cross-functional teams like development, product, infrastructure, and security work closely together. Setting up payments affects many parts of your business, so it's important that everyone involved is on the same page. Working in isolation can result in missing important details.

• Use webhooks to stay informed of completed payments, refunds, disputes, and more in real-time. This event-driven architecture means your systems can quickly respond to what customers do and any changes in data without waiting.

• Design with mobile payments in mind from the start, ensuring the checkout process works like it should on all devices and platforms. Since more than 60% of travel bookings are made on mobile, making your payment system mobile-friendly is non-negotiable for customer satisfaction.

• Build seamless cross-border and multi-currency experiences designed for what international travelers prefer and need. Support advanced features like multi-currency pricing, optimized routing for cross-border transactions, foreign exchange solutions, and more.

• Automate as much as possible after a payment, like recurring billing for subscriptions, managing complaints according to refund policies, and sending out invoices. This will reduce manual work and mistakes, making things smoother for your travelers.

Future-proof the integration architecture and make it easy to update. Ensure it can handle new payment ways, changes in laws, and new features with minimal rework. Prioritize flexibility over fragile designs.

Compliance and security

Adhering to industry compliance rules and security practices is critical for travel companies dealing with payments and financial information. Not doing this can lead to serious consequences, such as data theft, fraud, losing customers' trust, legal issues, and more.

The core standard to follow is the Payment Card Industry Data Security Standard (PCI DSS). This is a set of requirements designed to make sure that businesses handling credit card information keep it safe.

PCI DSS compliance is mandatory for any business that takes card payments. This includes merchants, processors, banks, and other services involved. The standart cover both technical and operational requirements like building secure networks, protecting stored data, controlling who can access information, managing risks, regularly checking for issues, and more.

A common strategy for travel companies aiming to ensure compliance is to work with processors and gateways that have already met the standards. By using these certified services, businesses can create secure systems that are in line with PCI requirements.

But even when payment processing is handled by another company, businesses must still make sure their own practices, systems, and data flows stick to PCI rules. This is especially important for actions that deal directly with customer payment information, like booking trips. To get and keep PCI DSS certification, companies need to do regular, detailed self-assessments, fix any security issues, and undergo audits or re-certification. Keeping payment data safe is an ongoing task that can't be ignored.

Not following the rules can be very expensive for travel businesses. Payment processors and credit card companies can charge hefty fines every month, from $5,000 to $100,000, depending on the company's size and the severity and length of the rule-breaking. While sticking to PCI rules doesn't make a business completely secure, keeping up with these standards can greatly reduce penalties if there's ever a data leak.

Some key tips for travel companies to protect customer information:

• Encrypt data transmission. Implement end-to-end encryption using strong protocols like TLS across all networks, databases and systems that process payments data.

• Use tokenization. This minimizes risk by replacing cardholder details with non-sensitive tokens that you can safely store and process instead.

• Limit data access. Keep cardholder data storage to a minimum and grant access only to those who absolutely need it through strong authentication.

• Segment networks. Isolate payment systems from the rest with firewalls to contain threats.

• Update software. Ensure all systems handling payments are consistently patched to protect against new vulnerabilities.

• Train your team. Educate employees such as developers, admins, and support staff on security policies and data protection practices.

• Regular monitoring. Implement monitoring tools and conduct periodic audits to assess compliance gaps.

Prioritize security and compliance from the start. Taking preventative steps can save travel businesses from damaging their reputation, legal battles, processing disruptions, and more down the line.

Optimizing the payment experience

While ensuring compliance and security is paramount, travel companies must also prioritize optimizing the payment process to deliver a stellar customer experience. A clunky, confusing, or insecure payment flow can lead to cart abandonment, negative reviews, and directly impact revenue.

There are several strategies travel businesses can implement to enhance the user experience during checkout and payment:

• Simplify the process. Reduce the number of steps and fields in the payment flow as much as possible without compromising security. Minimize redirects to external pages. The fewer clicks to purchase, the higher the conversion rate.

• Support mobile payments. With over 60% of travel bookings happening on mobile devices, it's critical to optimize the payment experience for smaller screens. Make forms easy to fill, actions tappable, and leverage mobile wallets for fast checkouts.

• Include guest checkout. Don't force customers to register an account before paying, as that adds unnecessary friction. Let them checkout as guests but provide an option to create an account post-purchase for future benefits.

• Use payment data effectively. Autofill fields wherever possible by securely storing payment data with customer consent. Add options for travelers to store payment methods for streamlined repeat purchases.

• Localize and internationalize. For global audiences, present prices in their preferred currencies and languages. Support their preferred payment methods. Make checking out effortless no matter where they're traveling from.

• Be transparent. Clearly display all costs and taxes upfront with no hidden fees and surprises, so customers know what to expect. No one likes billing shocks after purchase.

The payment stage is often the point where customers face the most trouble, leading many to give up on their bookings. Making this step easier helps travel businesses increase sales and make customers happier.

Mobile payments and digital wallets: simplifying travel

A major driving force behind optimized payment flows is the rapid rise of mobile payments and digital wallets. These technologies are reshaping how consumers purchase travel services and what they expect from the experience.

Digital wallets are secure, virtual versions of the physical wallet that store users' payment methods like credit and debit cards. In the industry context, they’re B2C applications that allow end-users to buy travel products and services online, make contactless payments via POS systems, and facilitate peer-to-peer money transfers. Well-known apps like Apple Pay, Google Pay, and Samsung Pay now let users keep all sorts of digital items they'd usually have in a physical wallet — like tickets, IDs, gift cards, boarding passes, keys, and more.

Instead of entering long card numbers and other billing details, customers can simply use their mobile wallet app to authenticate with biometrics like fingerprints or facial scans. The wallet then securely transmits the encrypted payment data to complete the transaction with just a tap or click — vastly simplifying checkout.

Open-loop vs. closed-loop wallets: what’s the difference?

It's important to know the difference between digital wallets that work everywhere (open-loop) and those that only work with certain brands (closed-loop). Closed-loop examples include Uber Cash, Walmart Pay, Starbucks mobile app, and others. In travel, many airlines like RyanAir and AirAsia use their e-wallets to encourage travelers to keep track of loyalty points, book flights, use rewards, and even buy things like meals and drinks during the flights. Online travel agencies also often have closed-loop wallets that let customers gather rewards or get quick refunds for their services.

While these brand-specific wallets are great for returning customers, they can't do as much as open wallets that let you pay in the entire commerce landscape. For travel companies, optimizing and integrating open digital wallets is quickly becoming necessary rather than just an opportunistic nice-to-have. Here are several benefits:

• Frictionless checkout. Letting customers use biometrics to confirm their identity and complete purchases makes the process much easier, avoiding the hassle of filling out long forms. This helps reduce the number of abandoned bookings and tackles two main problems with mobile checkouts: monotonous data entry and worrying about safety.

• Increased conversions. Customers are more likely to complete transactions on mobile when a seamless wallet option is present at checkout, and mobile wallet payments consistently drive higher conversion rates.

• Security and trust. Digital wallets use strong security methods, like tokenization and biometric authentication, to hide and protect payment information. These strict measures make customers feel more confident about keeping their personal data safe when buying things online.

• Attracting wider audiences. With wallet support, travel businesses open their services to entire verticals of mobile-first and mobile-only customers who exclusively use these payment methods.

Read our case study with Luxe Tribes, where we implemented a digital wallet for the travel agency. Travelers receive rewards for referring their friends and family members.

Final thoughts

In the dynamic world of travel, payment processing is more than just a transaction - it's a critical touchpoint that can make or break the customer experience. A seamless, secure, and localized payment journey is essential for driving bookings, fostering loyalty, and unlocking new growth opportunities across borders. Businesses that fail to prioritize frictionless payments tailored to diverse global preferences risk cart abandonment, escalating chargebacks, and lost revenue.

This is where investing in the right payment technologies and industry-tailored solutions becomes game-changing. By partnering with a trusted payment provider, travel companies can access robust tools purposely built to tackle cross-border complexity, navigate multi-currency pricing, and implement advanced fraud defenses. But it goes beyond just the transactional capabilities — delivering exceptional, on-brand experiences that help customers at every step. As the travel industry continues to evolve at a staggering pace, those who prioritize innovative payment strategies will be well-positioned to unlock new markets, reduce operational costs, and ultimately gain an undeniable competitive edge in the race for global growth.