The $24.5 Billion Checkout Problem: IATA Says Payment Costs Are Outrunning Airline Sales

Global airlines spent US$24.5 billion processing US$1.05 trillion in sales in 2025, with payment costs rising faster than sales growth and the average cost per passenger exceeding forecast net profit per passenger for 2026.

Global (Tourism Reporter) — Every journey begins somewhere. For the passenger, it may begin with a dream of somewhere new, a family reunion or a business opportunity waiting on the other side of the world. For an airline, however, that journey begins with a transaction—and the cost of completing it is becoming harder to ignore.

Every time a passenger taps a card to buy a ticket, part of the fare goes towards processing the payment before the aircraft has even left the gate. New figures from the International Air Transport Association (IATA) reveal the scale of this largely invisible burden. Airlines worldwide spent US$24.5 billion in payment costs in 2025, processing US$1.05 trillion in sales, according to data released on 27 October in Macao. Total payment costs rose 10.4% compared with 2023, outpacing the 7.7% growth in travel sales over the same period.

The comparison becomes more striking when measured against airline profitability. IATA puts the average payment cost at US$5 per passenger, while forecasting a net profit of just US$4.50 per passenger for 2026. These figures relate to different reporting periods, but they illustrate the narrow margins within which airlines operate—and why payment efficiency has become a significant commercial concern. The cost of processing a transaction can rival, or even exceed, the profit an airline expects to retain from a passenger.

For the tourism industry, the implications extend well beyond airline balance sheets. Payment costs can influence airline distribution decisions, the economics of selling ancillary products and the ease with which travellers complete a booking. IATA also warns that payment friction can mean lost revenue: approximately one in five ancillary purchase attempts fails when an initial payment is refused and no alternative method is offered.

This report examines the figures, breaks down where the costs arise and considers what IATA’s proposed solutions could mean for airlines, travel sellers and destinations. It also applies an important qualification: IATA is both presenting the findings and promoting payment solutions of its own. Its recommendations therefore warrant scrutiny alongside the figures, particularly because the release does not fully explain the methodology behind the estimates. The central question is not simply how airlines can process payments more cheaply, but how they can reduce friction without making the booking experience more complicated for passengers.

What IATA Found

The headline figures tell a revealing story: payment costs are rising faster than the sales they support. In 2025, airlines worldwide incurred US$24.5 billion in payment costs, up 10.4% from 2023. Over the same period, global travel sales increased by 7.7%, rising from US$977 billion to US$1.05 trillion. The implication is straightforward: payment processing is consuming a larger share of airline sales.

Based on IATA’s figures, payment costs amounted to approximately 2.3% of total sales in 2025. This is Tourism Reporter’s calculation, not a percentage published by IATA. Although the difference may appear modest, it matters in an industry where profitability is often measured in narrow margins.

IATA’s interim Director General and Chief Financial Officer, Sandrine Le Borgne, described the trend as unsustainable in an industry she characterised as “hyper competitive, capital intensive and famously low margin”. She argued that payment costs continue to rise faster than revenues despite significant technological advances, underscoring the need for greater cost efficiency.

IATA divides the US$24.5 billion burden into three main components:

The largest component is the direct fee charged for processing payments. Cards carry the highest reported average transaction cost at 2.53%, compared with an estimated average of 1.97% across all payment methods. IATA puts the cost of the least expensive options at just 0.01%.

That gap is central to IATA’s argument: the payment method can make a substantial difference to the cost of completing a sale. The most widely used option is not necessarily the cheapest for the airline accepting it. However, the figures alone do not establish that airlines can shift passengers to cheaper methods without affecting conversion rates, customer convenience or sales.

Two important qualifications deserve attention. First, IATA’s press release presents the headline figures but does not fully detail the methodology, including the airlines, markets and transaction types covered. The numbers should therefore be understood as IATA’s industry estimates, rather than a fully independently assessed measure of every airline’s payment costs.

Second, the averages conceal considerable variation. The reported US$5 payment cost per passenger and 2.53% average card fee do not apply uniformly across airlines, markets, card types or sales channels. A low-cost carrier selling a US$40 ticket faces a different commercial equation from a network airline selling a US$4,000 business-class fare. The real challenge is not simply reducing payment costs; it is doing so without adding friction to the booking journey or losing the sale altogether.

Where the Costs Come From

IATA’s breakdown reveals a payments chain with multiple links, each potentially adding to the airline’s cost of completing a sale. Payment fees account for 84.5% of the total burden, making them by far the largest component. Although IATA’s release does not itemise the individual charges, card payments typically involve several parties: the bank that issues the card, the card network that processes the transaction, and the acquiring bank or payment processor that connects the airline to the system. Each may charge a fee, leaving the airline to absorb the combined cost. In IATA’s figures, the average cost of card payments reaches 2.53% per transaction.

The second category, US$2.9 billion in airline operating costs, is less visible to passengers but no less significant. It covers payment systems, staff involved in processing and reconciling transactions, compliance with payment-industry requirements, and the financial consequences of delayed cash flow. That final element deserves particular attention. Airlines typically sell tickets well before departure, but the time between a customer making a payment and the airline receiving usable funds can carry a financing cost. Across an industry processing more than a trillion dollars in annual sales, even relatively short delays can have material financial implications.

The smallest category, US$900 million in fraud and uncollected sales, represents another pressure on airline revenue. Online ticket sales can expose airlines to fraudulent transactions and disputed payments. When a cardholder challenges a charge, the airline may face a chargeback and lose the revenue, depending on the circumstances and applicable rules. At 3.7% of IATA’s reported total, this category is considerably smaller than payment fees, but it represents money that airlines may lose without receiving the expected revenue from the transaction.

The release also highlights agency cards, which add another layer to the travel distribution system. When a travel agent uses a card issued to the agency to pay an airline, the transaction can attract card-processing fees even though the payment is part of a business-to-business settlement rather than a consumer purchasing a ticket directly. An alternative may be settlement through the IATA Billing and Settlement Plan (BSP), which facilitates transactions between accredited travel agents and airlines. IATA’s proposed approach includes improving visibility into agency-card costs so airlines can make more informed decisions about whether to accept them.

The broader lesson is that payment costs are not confined to the consumer checkout page. They are embedded throughout the systems connecting airlines, travel agents, corporate travel programmes and online booking platforms. For tourism businesses, the cost and reliability of moving money can influence how travel is distributed, how transactions are settled and how much revenue ultimately reaches the airline.

Why It Matters for Tourism

Airlines are among the most important suppliers in the travel economy, connecting destinations with visitors and supporting the wider network of hotels, tour operators and tourism businesses. When a cost pressure reaches the scale identified by IATA, its effects may extend beyond airline balance sheets. The association’s release does not quantify the impact on fares or consumers, so the following points represent Tourism Reporter’s analysis, rather than IATA’s findings. Four channels deserve attention.

1. Fares and fees. When payment costs rise faster than sales, airlines have three broad options: absorb the additional expense, increase prices or encourage customers to use less expensive payment methods. Depending on the market and applicable regulations, responses could include card-payment surcharges, incentives for bank transfers or digital wallets, and restrictions on accepted payment types. The extent to which airlines pursue these measures will depend on competition, customer preferences and their ability to absorb the additional cost.
2. Lost ancillary sales. IATA reports that approximately one in five ancillary purchase attempts fails when an initial payment is declined and no alternative is offered. This matters because seat selection, baggage, upgrades and lounge access generate additional revenue beyond the base fare. When a payment fails at the final stage, an airline can lose a sale even after successfully attracting the customer and presenting the offer. Making alternative payment methods available could help recover some of that revenue.
3. Travel sellers and corporate buyers. Agency cards, corporate travel programmes and the Billing and Settlement Plan (BSP) are all part of the payment landscape under scrutiny. Travel agents and travel management companies could face changes in the payment methods airlines accept, while corporate buyers may encounter new settlement arrangements as the industry moves towards Offers and Orders—IATA’s initiative to modernise airline retailing and move beyond traditional ticketing processes. How these changes are implemented could influence the cost and convenience of buying travel through intermediaries.
4. Destination access. Travellers can face barriers when airlines accept only payment methods that are uncommon or difficult to use in their home markets. IATA’s survey found that 29% of passengers preferred digital wallets, while 8% preferred local instant-payment solutions. For destinations seeking visitors from markets where these methods are widely used, payment flexibility could help make flight bookings more accessible. The figures indicate passenger preferences, however, rather than proving that limited payment options are already preventing a specific number of visits.

There is also a question of competitive exposure. Low-cost carriers may face particular pressure from percentage-based payment fees because their base fares are often lower and ancillary sales play an important role in their business models. A similar fee percentage can translate into different absolute costs depending on the ticket price, transaction value and payment mix. IATA’s release does not quantify the relative impact by airline business model, so this remains a consideration to investigate rather than an established finding.

For tourism boards and tour operators that depend on affordable air access, the issue is worth monitoring. If payment costs influence fares, booking completion or the methods travellers can use to purchase flights, the consequences could reach beyond the airline to the wider visitor economy. The key question is whether the industry can make payments more efficient without making travel harder to buy.

What IATA Proposes, and What to Question

IATA is exploring four lines of action to address different parts of the airline payment-cost problem, ranging from cheaper passenger payment options to greater transparency in business-to-business transactions.

1. Lower-cost payment options for passengers. IATA Pay enables passengers to purchase travel using local instant-payment solutions. According to IATA, it has been rolled out across 34 countries and 38 payment schemes. The IATA Financial Gateway (IFG) allows airlines and travel suppliers to manage and optimise payments across sales channels in more than 170 countries, covering over 300 payment methods.
2. Greater transparency on agency cards. IATA’s Transparency in Payments tool allows airlines to set their payment policies within the Billing and Settlement Plan (BSP). This gives carriers greater control over whether they accept agency-card payments or use alternatives such as IATA EASY PAY.
3. More efficient corporate travel payments. Through the transition to Offers and Orders, IATA is working with airlines and corporate customers on an approach intended to improve payment efficiency, simplify reconciliation and provide richer transaction data.
4. A framework for payment decisions. The new Airline Payment Framework – Management Foundation is designed to help airlines align their commercial, financial and operational priorities when selecting payment methods and managing payment costs.

The proposal also makes a revenue argument, not just a cost-saving one. Offering more payment options could help airlines recover ancillary sales lost when customers’ initial payments are declined. In that sense, payment flexibility becomes more than an expense-management exercise: it can also be a tool for improving booking completion and capturing additional revenue.

However, a careful assessment requires several questions. IATA is an airline industry trade association, and its proposed responses include its own products and services, such as IATA Pay, IFG and BSP-related tools. That does not invalidate its diagnosis, but it makes independent evidence of their effectiveness important. How much can these solutions reduce costs in practice? Which airlines and markets stand to benefit most? And how much of any saving would reach passengers through lower fares or better payment options?

The release also does not present the perspectives of card networks, issuing banks or payment providers. Their role in the debate matters because payment fees support services that can include fraud prevention, transaction processing, settlement infrastructure, consumer dispute mechanisms and cardholder rewards. The relative costs and benefits of these services would need to be assessed alongside the fees airlines pay.

There is a further consideration for travellers. A cheaper payment method is not automatically a better option for every customer. Bank-based payments and other lower-cost alternatives may offer different levels of consumer protection, dispute resolution and rewards compared with credit cards. Refund procedures and the experience of challenging an incorrect transaction may also vary by payment method and jurisdiction.

Ultimately, IATA’s proposals raise a broader question for the industry: how can airlines reduce payment costs while preserving convenience, security and consumer confidence? The answer will depend not only on the technologies adopted, but also on how the benefits, costs and risks are distributed between airlines, payment providers, travel sellers and passengers.

What Comes Next: Implications for Airlines and Tourism Businesses

The announcement came in Macao ahead of the joint IATA World Financial Symposium and World Passenger Symposium, scheduled for 28 and 29 October. Further discussion this week could shed light on the industry’s response to rising payment costs and the implications for distribution and customer experience. Beyond the events, five developments merit close attention.

• Adoption of alternative payment methods. IATA Pay’s presence in 34 countries and the finding that 29% of passengers prefer digital wallets suggest scope for wider adoption. The key measure will be whether airlines make these options available at checkout and whether passengers use them.
• Agency-card policies. If more airlines use BSP tools to restrict agency cards or change the terms under which they are accepted, travel agents and tour operators could face adjustments to their margins, payment processes and commercial arrangements.
• Corporate travel payments. Watch for pilot programmes linked to Offers and Orders. These could reshape how airlines and corporate travel management companies process payments, reconcile transactions and exchange information.
• Surcharges and incentives. Card-payment surcharges or discounts for lower-cost payment methods would be visible signs of airlines responding to payment expenses. Such measures could also attract regulatory scrutiny in markets where surcharges are restricted or subject to specific conditions.
• The next set of industry figures. Whether payment costs continue to rise faster than sales—and how the reported US$5 cost per passenger compares with subsequent profit forecasts—will help indicate whether the industry’s proposed measures are making a difference.

For tourism businesses, the practical implications are immediate. Hotels, tour operators, destination marketers and travel agencies face similar payment challenges, including lost bookings when a transaction fails. Offering locally relevant payment methods, providing customers with an alternative when their first payment is declined, and understanding the costs associated with each payment channel are sensible steps towards reducing friction. Travel agents should also review the agency-card policies of the airlines they sell before changes affect their existing arrangements.

The broader lesson is that payment costs have become a strategic issue for the travel industry. At US$24.5 billion annually, with costs growing faster than sales, payments can no longer be treated as a back-office concern. They influence the economics of selling air travel, the experience of booking a journey and the competitive choices facing airlines and their distribution partners.