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Cost pressures on corporate travel buyers and suppliers are bringing payment fees into focus.
Many actors take a cut of transactions, with issuers, acquirers and networks together collecting roughly 2 percent to 4 percent of each transaction. For suppliers working on margins of just 1 percent or 2 percent, those costs can cut into profitability. This tension is driving interest in alternative rails and heightened scrutiny of who pays for what in the B2B travel payment chain.
"The travel payment ecosystem is a multi-layered value chain," said Colleen Finch Schmidt, VP of strategy for mobility, delivery and travel at Adyen. "Each participant optimizes for different priorities and often runs on fragmented systems, which creates friction, delays and higher costs."
Knowing how charges are split has become critical for suppliers and buyers.
Breaking Down the Fees
When a corporate traveler books a flight or hotel, the payment typically runs through a card issued to the company, routed over a network like Visa or Mastercard and processed by the supplier’s bank before the funds reach the airline or hotel.
Alex Olsen, VP of global payment partnerships and spend management at HRS Group, said that if an interchange fee is around 2 percent, roughly 80 percent of that goes to the issuer, 7 percent to 8 percent to the acquirer, and the rest to the network. American Express, as both issuer and network, usually charges about a percentage point more than Visa or Mastercard, he added.
Beyond interchange, suppliers face foreign exchange spreads on cross-border bookings, while buyers may pay program fees and reconciliation costs, according to Wendy Ward, chief marketing officer at UATP. On top of that, payment disputes add fees and an administrative burden for suppliers, according to Daniele Caneschi, global director of agency payments at Sabre.
Travel management companies and global distribution systems don’t take a cut of interchange fees but can layer on service and booking fees, noted Blockskye CEO Brook Armstrong.
Processing fees weigh heavily on suppliers, which already operate on thin margins. The average airline profit margin was 1.2 percent in 2024, according to Armstrong. "If you’re paying a 2.5 percent merchant fee, you’re wiping out your margins," he said.
Co-branded card partnerships between issuers and suppliers can soften the blow, since airlines or hotels may pay 0.5 percentage point to 1 percentage point less when their own loyalty card is used. For corporate travel buyers, issuers typically return a portion of interchange fees as rebates—typically 1 percent to 5 percent—incentivizing companies to keep spend on their cards, Armstrong said.
Legal Pressure
Credit card interchange fees have faced U.S. legal challenges, culminating in a $6.2 billion Visa and Mastercard settlement in 2018, with new cases deferred until 2026. Still, sweeping reform seems unlikely in the current climate.
"We are a point culture in the U.S." Olsen said, referring to loyalty rewards and rebate programs. "Interchange is what funds those benefits. Capping it would turn the industry upside down." By contrast, Europe caps interchange fees and favors debit or account-to-account payments, while Asia-Pacific markets lean heavily on digital wallets, he added.
New Models
Suppliers and buyers are turning to new payment models to cut costs and reduce friction. These include virtual cards, which are seeing wide adoption.
"Virtual cards are already embedded at scale in corporate travel because they directly address control, reconciliation and fraud. That trajectory will continue," said Adyen’s Finch Schmidt.
Some suppliers and agencies are rolling out direct-pay arrangements, which bypass card networks, bringing faster settlement and lower fees. Instead of routing through an issuer and acquirer, funds move directly from a corporate account to the supplier. Blockskye’s BMax platform, for example, uses account-to-account transfers to connect corporate buyers and suppliers directly.
Meanwhile, airlines continue to back UATP, the industry’s closed-loop network. By connecting buyers and suppliers directly, UATP avoids interchange fees and uses direct billing with automatic data capture.
When corporates move to lower-cost options for suppliers, they give up interchange rebates. But some buyers may be looking beyond financial incentives.
"Buyers may seek better pricing, extended payment terms, or bundled services," UATP's Ward said. "Suppliers, possibly also saving on costs, may be more willing to collaborate or offer concessions."
Costs to Hold Firm
Even as suppliers and corporates test new methods to lower fees, experts say the overall cost of payments in travel isn’t likely to fall dramatically.
"The all-in cost of payments in travel is unlikely to fall materially given the risk, refund and chargeback dynamics inherent to the sector," said Adyen’s Finch Schmidt. While regulators sometimes cap interchange fees, issuers and networks often reintroduce costs through alternative fee structures. Reconciliation, disputes and fraud monitoring make it hard for suppliers to realize savings even if interchange rates fall.
In a business built on thin margins, every basis point counts—and the search for cheaper, faster ways to pay continues.