🇺🇸United States

Excess processing costs from inefficient, complex payment ecosystems

3 verified sources

Definition

The complexity of managing multiple payment providers, acquirers, and rails increases direct processing costs for both inbound and outbound travel payments. These costs include higher acquiring fees, gateway charges, and operational overhead to maintain disparate systems.

Key Findings

  • Financial Impact: Airline payment transactions alone cost $20.3B annually (2.2% of transaction value); broader travel merchants report payment system complexity as a major issue impacting profitability.[4]
  • Frequency: Daily
  • Root Cause: Reliance on a patchwork of legacy and specialist providers for cards, bank transfers, wallets, and local payment methods; lack of consolidated volume to negotiate better rates; and resistance to adopting newer, more efficient payment solutions despite clear pain points.[4][7][8]

Why This Matters

This pain point represents a significant opportunity for B2B solutions targeting Travel Arrangements.

Affected Stakeholders

CFO, Head of Payments, Procurement for Payment Services, Treasury Manager

Deep Analysis (Premium)

Financial Impact

$10,000-$30,000 per event from reconciliation delays, disputed invoices, and payment settlement friction • $10,000-$35,000 annually from payment processing delays, expedited payment fees, and invoice reconciliation errors • $10K+ annually from 3%+ processing rates.

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Current Workarounds

Compliance-tracked spreadsheet; manual invoice verification against government contracts; delayed payment processing due to audit requirements; email documentation • Custom Excel exports from GDS. • Custom Excel sheets for fee tracking and manual gateway logins.

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Methodology & Sources

Data collected via OSINT from regulatory filings, industry audits, and verified case studies.

Evidence Sources:

Related Business Risks

Margin erosion from FX spreads, bank fees, and high-cost payment rails on supplier remittances

For airlines alone, payment transactions cost $20.3B annually (2.2% of transaction value, ~78% of net profits), implying multi‑billion‑dollar leakage across the wider travel sector from payment costs and fees every year.[4]

Unrecovered costs from late customer payments versus fixed‑date supplier remittances

Average time to receive payment after invoice due date is 40.3 days; almost 40% of travel businesses report most invoice payments arriving outside specified terms, indicating systematic working‑capital leakage at scale.[1]

Labor cost overruns from manual supplier payment processing and reconciliation

60% of large travel firms lose more than 1.5 hours per employee per week to manual payment processing; at scale this translates into significant additional FTE cost that could otherwise be avoided.[3]

Payment errors causing supplier disputes, rework, and service disruption

Manual reconciliations and errors for operators running multiple tours each season can “snowball into major delays and lost productivity,” indicating recurring operational and service‑recovery costs, even if not always quantified as direct refunds.[2][3]

Extended days sales outstanding (DSO) due to late payments and slow settlement cycles

Average time to receive payments after invoice due date is 40.3 days, and nearly 40% of travel businesses report most invoices are paid outside specified terms, implying chronic working‑capital drag.[1]

Operational bottlenecks from manual outbound payments limiting booking capacity

60% of large travel firms losing 1.5+ hours per employee per week to manual processing indicates substantial lost operating capacity that could otherwise support more bookings and revenue.[3]

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