How tech is shaping B2B payments for travel companies

Payment challenges in travel companies

Travel companies must coordinate payments across multiple suppliers, often dealing with different currencies, tax structures, and contract terms. Traditional payment methods, such as wire transfers and manual invoicing, create inefficiencies, leading to:

• Reconciliation issues – Discrepancies between expected and actual charges can result in disputes and delays.
• Fraud risk – Travel transactions are vulnerable to attacks like BIN fraud and phishing.
• Cash flow constraints – Slow settlement times affect liquidity and business growth.

A shift from the traditional pass-through payment model to the merchant of record (MoR) model is helping travel agencies take control of their transactions. In this approach, the agency collects customer payments and settles them with suppliers directly, improving financial transparency and security.

Why travel agencies are adopting the MoR model

The merchant of record (MoR) model is becoming the preferred payment approach for travel agencies. Unlike the pass-through model, where customer payments go directly to suppliers, the MoR model allows agencies to handle transactions themselves. This shift offers several benefits:

• Better financial protection – Agencies have full visibility into B2B payment flows and can set clear network rules.
• More control over the customer experience – A single point of payment reduces customer confusion and improves service quality.
• Improved cash flow – Payments go directly to the agency’s account, completing the transaction process with reliable settlements.

According to Mastercard, travel agencies using the MoR model grew at twice the rate of those relying on traditional methods between 2020 and 2022.

Virtual cards: A smarter way to manage payments

Virtual card numbers (VCNs) are digitally generated, single-use payment credentials linked to specific transactions. They function like traditional cards but with added security features. Travel agencies using virtual cards benefit from:

1. Better control over transactions

Each virtual card is issued for a specific booking, supplier, and payment amount. This reduces unauthorized charges and ensures that payments match contract terms. Travel companies can set spending limits, expiration dates, and usage restrictions, preventing misuse.

2. Lower fraud risk

Virtual cards significantly reduce fraud exposure. Unlike physical cards, they cannot be reused or stolen. Mastercard reports that virtual cards lower fraud risk by 30 times compared to traditional payment methods​.

3. Simplified reconciliation

Since virtual cards are linked to individual transactions, agencies can track payments in real time. Every charge includes detailed metadata, making verifying supplier invoices and resolving disputes easier.

4. Faster supplier payments

Traditional payments often require invoicing, bank transfers, and manual approvals, delaying settlements. Virtual cards provide immediate payments, improving relationships with airlines, hotels, and tour operators. Suppliers benefit from quicker cash flow, reducing the risk of cancellations due to non-payment.

5. Cost savings on cross-border transactions

Travel agencies frequently work with international suppliers, which results in high foreign exchange fees. Virtual cards allow companies to issue payments in multiple currencies, minimizing conversion costs. By using digital payment methods, agencies can reduce reliance on costly wire transfers and minimize transaction fees.

Choosing the right B2B payment solution

In improving their transactions, travel companies could also integrate more reliable payment service providers who can provide an all-in-one service. Moving money across borders requires a reliable partner who understands the nature of a demanding industry.

Here’s what travel companies should prioritize when considering B2B payment solutions:

• Integration with existing systems – The service must integrate smoothly with booking engines, accounting software, and supplier networks.
• Scalability and adaptability – As OTAs expand—projected to generate $1.5 trillion by 2027—their payment systems must scale. Solutions should support diverse markets, currencies, and transaction volumes.
• Collaborative partnerships – The best payment providers work closely with agencies, suppliers, and financial institutions to encourage creativity. Shared insights help refine tools, like dynamic pricing or fraud detection algorithms.

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