With multiple stakeholders, high transaction values, and complex international settlement flows, travel businesses face unique payment challenges that impact revenue and customer experience.
Two-thirds of travel firms (66%) experience up to 10% revenue loss due to payment inefficiencies. In a fiercely competitive industry with razor-edge profit margins, it’s become a critical issue that Online Travel Agencies (OTAs) can’t ignore.
Why managing transactions is a ‘big’ issue for OTAs
If you’re an OTA running a web-based marketplace for end-to-end travel services, you’re likely managing a vast and complex ecosystem involving multiple service providers.
Once a customer makes a payment, the funds must be split and distributed to third parties, including airlines, hotels, car rental companies, insurance providers, and other activity or event partners. As a two-sided network connecting travelers with transport and activity providers, OTAs must accommodate customers from around the world—each with their own preferred local payment methods. Payments and payouts are often high-value, cross-border, and in multiple currencies, adding further complexity.
Moreover, there's the added pressure of managing the limited availability of seats, rooms, or activities before they sell out. Inventory is often reserved for a short period (e.g., 30 minutes) to mitigate this. At the same time, customers finalize the transaction, making payment speed and reliability crucial factors in managing OTA cash flow.
As your OTA scales, managing payments and settlements across this ecosystem can quickly become a significant operational challenge.
Four challenges that impact OTA payments strategy
OTAs operate in a highly complex payment environment, facing unique challenges that impact revenue, customer experience, and operational efficiency. From managing fraud risks to handling multi-party settlements and ensuring seamless transactions, OTAs must navigate several hurdles to optimize their payment strategy. Here are four key challenges shaping the industry today.
High-risk transactions and fraud exposure
Acquirers classify OTAs as high-risk due to delayed transactions—payments made well before (sometimes months or years) before the service is delivered—which increase the likelihood of refund abuse, fraud, and chargebacks, leaving both parties vulnerable. OTAs rely on advanced fraud detection tools like Riskified, Forter, and Sift to mitigate these risks. These tools use real-time fraud scoring and sophisticated algorithms to assess transaction risks and reduce fraud rates. However, while these solutions are required, the cost of integrating directly with them creates overhead in time, money, and resources.
Some processors mandate that an OTA must work with a fraud detection tool before they are willing to process payments on the OTA’s behalf.
Complicated multi-party payments and settlement flows
OTAs frequently split customer payments across various service providers, each with unique payment needs, such as real-time payouts or complex currency conversions. Efficiently managing these payment flows and ensuring timely reconciliation is crucial to avoid settlement delays that can harm relationships and competitiveness.
Payment failures and managing multiple PSPs
Travel transactions are often high value, making them vulnerable to payment failures like "Insufficient Funds" or "Do Not Honor" declines, leading to lost bookings and frustrated customers. Relying on a single payment service provider (PSP) is risky for OTAs, as outages or failures can severely disrupt operations, so routing payments through multiple PSPs is essential to ensure high availability and seamless processing across various regions and methods. While 45% of travel businesses consider payment routing the most crucial attribute for PSPs, managing multi-provider setups adds even more complexity to already stretched systems.
Limited payment options and high cart abandonment
Customers expect diverse payment options when booking travel, including APM like Buy Now, Pay Later (BNPL) methods, digital wallets, and local bank transfer options. OTAs risk cart abandonment by failing to provide these options. Yet more than half of travel payments leaders (51%) say it’s hard to keep pace with new payment methods.
Solving the choice/complexity conundrum
So, how can OTAs effectively balance the need for diverse payment options with the challenge of managing payment complexity?
Many forward-thinking OTAs are adopting unified global payment platforms like Primer, which offers payment orchestration as one of its core functions.
These platforms provide a single interface for managing everything from transactions to fraud prevention, eliminating the need for multiple payment systems, complex routing, and manual coding and removing interoperability and multi-API management issues.
They also address key pain points for OTAs by:
- Simplifying multi-PSP switching
With Primer, OTAs can dynamically route payments across multiple PSPs to reduce failures, ensure redundancy, and optimize costs. By leveraging automated payment routing, businesses maintain uptime, increase transaction success rates, and enhance customer experiences. Companies like loveholidays and GetYourGuide are expanding their PSP networks to boost resiliency and conversion—without added complexity. - Optimizing fraud prevention and 3DS decision-making
Primer enables OTAs to integrate best-in-class fraud prevention tools and optimize 3DS authentication in a single workflow. Real-time fraud scoring and adaptive authentication help minimize chargebacks while ensuring a frictionless customer experience. With Primer, OTAs can fine-tune fraud controls and dynamically trigger 3DS only when needed, reducing unnecessary authentication steps. - Enhancing checkout experience & payment flexibility
With Primer’s payment vaulting and streamlined checkout capabilities, OTAs can enable faster repeat bookings, reduce cart abandonment, and improve overall UX. Customers can seamlessly select their preferred payment methods—including BNPL, cards, and digital wallets—without friction, driving higher conversion rates and customer satisfaction. - Leveraging network tokenization
Primer’s network tokenization ensures payment methods remain secure, reusable, and optimized for cost efficiency. Instead of relying on individual PSPs, centralized tokenization enhances payment continuity across transactions, reduces interchange costs, and strengthens fraud protection all while offering a seamless customer experience.
A gamechanger for growth
Getting payments right is not just about overcoming day-to-day challenges. It’s also about creating a platform to scale and grow your travel business. That’s why 90% of travel executives are now prioritizing upgrades to payments and financial operations systems.
Today’s unified global payments infrastructure makes it possible to manage multiple payment providers, fraud detection tools, and APMs with minimal complexity and without excessive engineering effort.
With a single integration platform, you can streamline your payment processes and free up valuable development resources to focus on other business and customer-facing service priorities.
With the right partners and platforms, you can finally say "goodbye" to the travel industry's elephant in the room and "hello" to the revenue and conversion benefits of streamlined OTA payment efficiency.
Get in touch to learn more about what Primer can do for you.
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