Why are airlines worried about what payments cost them?

Airlines spend more to take a payment than they expect to earn on the passenger. That's the sharpest line in new IATA data released this week, and it explains why airlines are looking hard at how tickets get paid for, including tickets agencies sell.

What did IATA find?

Payment costs are growing faster than sales. From 2023 to 2025, airline payment costs rose 10.4 percent, while travel sales grew 7.7 percent. IATA says the average cost of processing payments per passenger is now higher than the net profit per passenger it forecasts for 2026.

IATA's interim Director General and CFO, Sandrine Le Borgne, called the trend unsustainable for an industry she described as famously low margin.

Where does the money go?

Mostly to fees. IATA splits the total into three parts:

• Payment fees, the direct cost of each transaction: 84.5 percent.
• Airline operating costs for payment systems, delayed cash flow, staff and compliance: 11.8 percent.
• Fraud and uncollected sales: 3.7 percent.

Why do cards stand out?

They're the most expensive way to pay. IATA puts average card fees at 2.53 percent of the transaction, against an estimated 1.97 percent across all payment types. The cheapest options it measured cost 0.01 percent.

For agencies, cards matter because so much corporate and leisure travel is paid by card, whether it's the traveler's card, a company card or a lodged card held by the agency.

What are airlines doing about it?

IATA is pushing cheaper payment methods and more airline control. Its release names several tools:

• Transparency in Payments. A BSP service that lets each airline set its own payment policy, including whether to accept an agency card in place of the customer's card, or to use lower-cost BSP options such as EASY PAY.
• IATA Pay. Local instant payment methods for travelers, live in 34 countries across 38 payment schemes.
• Corporate travel payments. IATA is working with airlines and corporate customers on a new payment approach for the move to orders. The aim is simpler reconciliation and richer data.

BSP is IATA's settlement system for markets outside the US. US agencies settle through ARC, so these tools reach a US agency through its international sales and through the direction airlines take next.

What changes for US agencies?

Two things to watch. First, airline payment policy. As carriers look at what each form of payment costs them, expect clearer rules on agency cards and company cards, set airline by airline.

Second, orders. On October 27, ARC released a second version of ARC Connex Orders that settles orders paid with debit, credit and charge cards. ARC launched the first version in January for cash orders. ARC's Director of Payments, Jennifer Watkins, said accurate payment information is essential throughout the order lifecycle. For agencies selling more NDC content, that means card orders can now report and settle through ARC, and the form of payment on each order needs to match your records.

What should agency leaders do now?

1. Know your mix. Pull a month of ARC sales and see what share was paid by card, and whose card it was.
2. Read each airline's payment rules. Keep a short note per carrier on which forms of payment it accepts from agencies, and review it each quarter.
3. Match the form of payment weekly. Check each transaction's form of payment in IAR against your accounting system before you authorize the report.
4. Ask corporate clients about their cards. Programs with lodged or virtual cards will feel airline payment changes first.

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