IATA raises alarm as airline payment processing costs surge to $24.5 billion

The International Air Transport Association (IATA) has sounded the alarm about rising payment processing costs, revealing that airlines worldwide spent $24.5 billion to process $1.05 trillion in travel sales in 2025.

According to fresh data from the clearing house for over 300 global airlines, payment processing costs jumped 10.4% from 2023, far outpacing the 7.7% growth in overall travel sales over the same period, which rose from $977 billion.

The figures underscore a stark reality for global carriers: processing a ticket payment now costs an average of $5 per passenger. By comparison, IATA projects that airlines will average a net profit of just $4.50 per passenger in 2026, meaning payment processing fees actively wipe out more than an entire passenger’s net profit margin.

“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,” said Sandrine Le Borgne, IATA’s Interim Director General and CFO.

 “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.”

A breakdown of the $24.5 billion expenditure shows that direct payment processing fees accounted for the lion’s share at $20.7 billion (84.5% of the total). Operational expenses, including payment systems upkeep, delayed cash flow, staffing, and regulatory compliance, consumed $2.9 billion (11.8%).

Fraud and uncollected sales wiped out an additional $900 million (3.7%).

Credit and debit card transactions were the most expensive route for carriers, averaging a payment fee of 2.53% per transaction, well above the overall average processing fee of 1.97%. Conversely, the lowest-cost payment methods averaged just 0.01%.

To stem the bleed, IATA is pursuing several initiatives to streamline payment operations and steer passengers toward lower-cost alternatives.

Results from the 2025 IATA Global Passenger Survey indicate strong consumer appetite for alternative payment methods, with 29% of passengers preferring digital wallets and 8% opting for local instant payment solutions.

IATA is also prioritising payment transparency within its Billing and Settlement Plan (BSP). This functionality lets airlines decide dynamically whether to accept agency-issued cards or direct travel agents to more cost-effective options, such as IATA Easy Pay.

At the same time, as the aviation industry shifts toward modern “Offers & Orders” retailing models, IATA is collaborating with carriers and corporate clients to overhaul corporate travel payments.

The goal is to simplify reconciliation, provide richer data, and offer greater flexibility in payment management.

To help carriers streamline internal operations, IATA introduced the Airline Payment Framework-Management Foundation, a strategy designed to align commercial, financial, and operational goals so payments enhance both the customer experience and bottom-line performance.

Le Borgne highlighted that modernising payment infrastructure isn’t just about cutting costs; it represents a major revenue opportunity.

“About one in five ancillary purchase attempts are not completed because the initial payment attempt was refused and no other method was offered,” Le Borgne noted.

“Enabling more payment options has the potential to help airlines realise some of this lost revenue.”

Wole Shadare