How to reduce costs when accepting travel payments

Jack Palley
Jack Palley
is Senior Client Success Manager at Flywire.

Today’s global traveler demands a simple and convenient payment experience when booking a trip, forcing operators to accept credit cards, Paypal, or other localized payment methods in order to remain competitive. Yet, at a time when cash flow is critical and margins are already tight, losing 3% or more of every transaction can quickly add up.

At Flywire, we specialize in providing payment solutions that meet these needs while providing significant cost savings for both merchant and guest. In fact, by processing all payments through Flywire, some of our travel clients are able to save tens of thousands of dollars annually.

So how do we do it? Let’s take a look.

Introducing Boston Travel Company

In order to demonstrate how Flywire can reduce your payment costs, let’s create a fictional travel business. We’ll call it the "Boston Travel Company”, or BTC, and say it fits the profile below:

Below, we’ll look at what a company such as BTC might be paying in payment fees today, based on typical rates and pricing. Then we’ll look at how much they could potentially save with Flywire. While this is just an example of what one company might experience, these savings are typical for Flywire clients. To get an estimate of your own potential savings, request a free travel payments assessment.

Without Flywire

Prior to using Flywire, BTC was using a standard merchant solution, like or Stripe, to accept credit card payments. For such solutions, there are multiple fees involved when processing an international customer’s credit card. The first is the merchant/receiver fee, which is typically a percentage, plus a fixed fee (e.g. 2.9% + .30 per transaction). If currency conversion is required, additional fees (typically around 1%) often apply.

On the other side of the transaction there is the payer/cardholder fee (sometimes called a cross-currency charge or foreign transaction fee). This is charged to the payer when the transaction is charged in a currency other than the one on their statement. This fee is generally a mark-up on the exchange rate, typically about 3%. Additionally, the payer won't know the true cost of that payment until they receive their statement at the end of the month, which can result in some unpleasant surprises.

Credit card fees for Boston Travel Company and their international customers might look like this:

Prior to using Flywire, The Boston Travel Company and its payers are incurring $69,000 USD in credit card processing fees.

With international wire transfers, there are also fees on both sides. Receiving fees that the merchant will pay their bank for receiving an international wire (typically around $10-15 USD), and the sending fees incurred by the payer of the transaction, which would include the foreign exchange markup (around 3%), and a fixed wire fee (often about $10-15) paid to their bank.

This is an example of the bank fees the Boston Travel Company and their international customers would incur on $1M USD worth of transactions:

So the cost for international wires, although cheaper than credit card processing fees, is still significant at about $35,000 USD total to move $1M USD.

With Flywire

Having moved over $16 billion, Flywire has tremendous buying power with our payment processing partners. This allows to reduce costs, and pass savings along to our clients. In this example, Flywire can help BTC reduce the merchant fees on credit card transactions to around 1.5%, and the cardholder fees to around 2%, giving an all-in cost of around 3.5% or $35,000.

For wire transactions, Flywire accepts payments in the payer’s local currency and pays out to the merchant in their own local currency. Dealing in domestic transactions on both sides eliminates the banks’ foreign transaction fees on both sides. This allows Flywire to significantly lower the total transaction cost from ~3.5% to ~2%.

With savings realized on both credit card and wire transactions, BTC and their guests will save an estimated $49,000 a year when paying with Flywire.

By controlling the foreign exchange and all payment processing costs, Flywire is able to allocate these lower fees per the merchant’s wishes. This allows us to give each merchant the ability to share costs with their customers in whatever proportion works best for them.

In this example, The Boston Travel Company has been able to reduce overall costs of collecting payments on both sides of the transaction by over 47%. The payers total costs are reduced by $22,000, or about 35% of their original costs. The receiver of the payment, BTC, ends up saving about $27,000 a year, or around 67% on their original payment costs.

Additional Flywire Benefits

In addition to reduced payment fees, Flywire clients enjoy the following benefits:

  • Payment options: Guests choose their preferred local payment method (PayPal, AliPay, credit card, bank transfer, etc.), and merchants receive payments in their choice of currency.
  • Improved guest experience: Travelers receive a simplified payment experience, with competitive rates, and 24x7 live support.
  • Reduced back office work: Simplified payment reconciliation and easy integrations with your existing flows and processes mean less time managing payments and more time creating superior travel experiences.

The above estimates are based on sample data for a fictional company, using typical industry rates and pricing. But we can personalize these estimates specifically for your travel business! Want to find out how much Flywire can save you? Click here to request a free travel payments assessment.

Free travel payments assessment