The International Air Transport Association (IATA) has reported that airlines worldwide incurred $24.5 billion in payment processing costs in 2025, highlighting growing financial pressures as transaction expenses rise faster than travel sales.
The costs were incurred on $1.05 trillion in airline sales,
representing a 10.4% increase in total payment expenses compared with 2023.
Over the same period, travel sales grew by 7.7%, from $977 billion, according
to IATA.
The average payment processing cost reached $5 per
passenger, exceeding the $4.50 net profit per passenger that IATA forecasts
airlines will generate in 2026.
“The airline industry is hyper competitive, capital
intensive and famously low margin. In such an environment every cost item needs
to be looked at carefully. The fact that payment transaction costs are
increasing faster than industry revenues is unsustainable and, despite
significant technological advances, highlights the critical need for greater
cost efficiency,” said Sandrine Le Borgne, IATA’s Interim Director General and
CFO.
Payment fees account for most costs
IATA's analysis found that direct payment fees accounted for
the largest share of the industry's total payment costs in 2025, amounting to
$20.7 billion, or 84.5% of the total.
Airline operating expenses associated with payments
represented a further $2.9 billion, or 11.8%. These included payment systems,
delayed cash flow, staffing and compliance costs.
The remaining $900 million, equivalent to 3.7% of the total,
was attributed to fraud or uncollected sales.
Payment methods also had a significant impact on transaction
expenses. Card payments recorded the highest average payment fees at 2.53%,
compared with an estimated overall average of 1.97%. The lowest-cost payment
options carried fees of just 0.01%.
IATA promotes lower-cost payment alternatives
To address the growing cost burden, IATA is exploring
several measures aimed at improving payment efficiency, including expanding
access to lower-cost payment methods.
The association's 2025 Global Passenger Survey found that
29% of passengers preferred digital wallets, while 8% favoured local instant
payment solutions.
IATA Pay and the IATA Financial Gateway (IFG) are among the
tools designed to help airlines respond to changing passenger preferences. IATA
Pay enables customers to purchase travel through local instant payment
solutions and has been rolled out in 34 countries, supporting 38 payment
schemes.
IFG provides airlines and travel suppliers with a platform
to manage, optimise and control payments across multiple sales channels in more
than 170 countries, using over 300 payment methods.
IATA is also seeking to improve transparency around agency
card costs through its Transparency in Payments solution. The initiative allows
airlines to establish payment policies within the IATA Billing & Settlement
Plan (BSP), helping them make informed decisions on accepting agency cards
compared with customer cards or alternatives such as IATA EASY PAY.
Corporate travel and payment efficiency
The association is also working with airlines and corporate
customers to develop a new approach to corporate travel payments as the
industry transitions towards Offers & Orders.
The initiative aims to improve payment efficiency, simplify
reconciliation and provide richer data, while offering airlines and corporate
customers greater flexibility in managing transactions.
Additionally, IATA has introduced the Airline Payment
Framework – Management Foundation to help airlines align commercial, financial
and operational priorities when evaluating payment options.
Beyond reducing costs, IATA said offering more payment
choices could help airlines recover sales lost through declined transactions.
“In addition to cost-efficiency, IATA research shows that
providing passengers with alternative payment methods could also have a
revenue-generating impact. About one in five ancillary purchase attempts are
not completed because the initial payment attempt was refused and no other
method was offered. Enabling more payment options has the potential to help
airlines realize some of this lost revenue,” said Le Borgne.
IATA's findings underscore the importance of payment efficiency as airlines seek to protect margins, reduce transaction expenses and improve the passenger purchasing experience. -TradeArabia News Service