Digital
payment adoption is exploding, adding complexity to the intricate
web of payment methods travel providers must accept. For airlines and hotels,
payment orchestration—technology that sits atop existing payment infrastructure
and integrates with multiple providers — allows for connections to a wide range
of payment methods without the need to build direct connections to each one.
For
travel suppliers, payment orchestration solves the challenge of the complex and
time-consuming process of building and maintaining those connections every time
they wish to add another payment option along with the tools to manage those
connections—handling chargebacks or preventing fraud, for example. For travel
buyers, it helps ensure that their preferred payment methods, such as virtual
cards will be accepted as technology evolves.
“The
challenge … is building up enough of the ecosystem and staying on track,
because there's new payment methods coming out almost on a daily basis, if not
multiple on a daily basis,” said Damian Alonso, senior vice president of
commercial and partnerships at Outpayce, the payments arm of global travel
technology and distribution company Amadeus.
Of
course, using a third-party for payment orchestration rather than managing
payment connections internally brings an added cost to suppliers. Additionally,
some of the payment orchestration technology providers are not travel industry
specialists, so many airlines are still fine-tuning their strategies in
managing their payment channels.
Adoption
Growth
UATP
One, the orchestration solution UATP launched in 2022, is now used by
approximately 20 airlines, said Wendy Ward, chief marketing officer at UATP.
Meanwhile, Canadian fintech Nuvei—a major player in the payment orchestration
space—said it’s supporting more than 700 payment methods and serving airlines
directly, as well as through orchestration platforms that use its acquiring and
alternative payment method capabilities, according to Damien Cramer, the
company’s senior vice president and head of travel.
Cramer
said payment orchestration adoption "accelerated significantly" after
the pandemic due to a desire for greater control over credit risk.
"Orchestration
emerged as a way for airlines to manage this complexity, while diversifying
both acquirers and payment methods," he said.
Outpayce
was founded in 2023, but Amadeus’s journey toward payment orchestration long
predated that, said Alonso. The platform’s reach has steadily grown since its
launch, serving more than 100 airlines and integrating close to 1,000 hotel
properties into the orchestration logic. It connects to more than 400 payment
service providers, including alternative payment providers, said Alonso.
Meanwhile
the International Air Transport Association’s solution, IATA Financial Gateway
founded in 2018, continues to expand its global reach as airlines' knowledge of
payments grows, said Hoy Chin Yeoh, director for industry financial services at
IATA.
Payment
orchestration's growth stems from a need for risk diversification—spreading
risk exposure across acquirers and reducing failure points—and to enhance local
payment enablement, he said.
"As
air traveler demographics diversify, supporting region-specific payment
preferences is no longer optional," said Cramer. He noted that payment
orchestration drives higher approval rates by dynamically routing transactions
to the best-performing acquirer while also reducing operational complexity and
accelerating time to market by eliminating the need for direct integrations.
Barriers to Adoption
Companies
still face resistance due to existing acquirer agreements and trust issues,
experts said.
"If
an airline has a co-brand card, those tend to be very long agreements. [Those
with] payment service providers acquiring these tend to be five- to 10-year
contracts,” said Ward.
In
addition, the control GDSs have across various sales channels could also be a
barrier, said IATA’s Yeoh. Meanwhile, a reluctance to hand over control of a
critical infrastructure layer is also an obstacle, as payment orchestration
requires trust and alignment on long-term vision and capabilities, according to
Nuvei's Cramer.
A Bet on Emerging Tech
Outpayce
is working on AI-based refinements to accommodate consumer habits, including
the possibility that AI agents could coordinate multiple payment methods used
in a single travel transaction.
"How do we help our customers make sure they can use multiple ...
forms of payment in a single booking, and making sure that's all
encompassed in a single transaction?" said Alonso. "How do
we combine and choose the order of preference for that traveler without the
traveler necessarily having to do that on a case-by-case basis ... and
then [have] agentic AI orchestrate that experience?"
Outpayce
currently uses machine learning to analyze data and route transactions, he
added.
Other
companies in the space are also exploring how AI can improve payment flows. Use
of AI for real-time routing of transactions, along with analytics, represent
use cases that are "gradually starting," said IATA's Yeoh. Meanwhile,
UATP is building an "enhanced layer" that will encompass AI and
machine learning and aim to drive payment orchestration efficiencies, Ward said.
The
rise of new payment methods—including virtual cards, "buy now, pay later"
services and account-to-account methods—is putting pressure on orchestrators to
expand their integration capabilities.
"Payments
are moving very quickly… you're talking virtual cards, tokenization,
stablecoins and companies that have historically [been] very conservative are
getting more technologically advanced to go into these newer forms of payment,"
said Ward. "It’s exciting, because there's opportunity."
Alonso
declined to give a timeline for agentic AI’s launch but noted AI’s progress has
far outpaced expectations.
"It's
a bit of a crystal ball," he said. "Maybe four or five months ago,
none of us really knew about agentic AI, and we see the adoption of how quickly
AI has interrupted our lives…technology is evolving rapidly, and we obviously
need to make sure we're on top of it."