Airlines’ Payment Processing Costs Surpass Net Profit Per Passenger, IATA Reveals

The International Air Transport Association (IATA) has revealed that airlines globally incurred $24.5 billion in payment processing costs in 2025 to handle $1.05 trillion in ticket sales.

This represents a 10.4 per cent increase in total costs compared to 2023, significantly outpacing the 7.7 per cent growth in travel sales over the same period.

The disproportionate rise highlights a critical financial strain: the average payment transaction cost is $5 per passenger, whereas airlines are only forecast to make a net profit of $4.50 per passenger 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,” 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 reveals that $20.7 billion (84.5 per cent) was attributed to direct payment fees. Operating costs; including payment systems, delayed cash flow, staffing, and compliance, accounted for $2.9 billion (11.8 per cent), while $0.9 billion (3.7 per cent) was lost to fraud or uncollected sales.

Credit cards remain the most expensive payment method, carrying an average fee of 2.53 per cent, which is higher than the overall estimated average of 1.97 per cent. In contrast, the lowest-cost payment options averaged just 0.01 per cent.

To address these rising costs, IATA is exploring alternative, lower-cost payment methods. The 2025 IATA Global Passenger Survey found that 29 per cent of passengers prefer digital wallets, and 8 per cent favor local instant payment solutions.

IATA is advancing initiatives such as IATA Pay, which enables local instant payments and is currently active in 34 countries with 38 payment schemes. Additionally, the IATA Financial Gateway (IFG) allows airlines to manage and optimize payments across more than 300 methods in over 170 countries.

Beyond cost-efficiency, IATA noted that offering diverse payment options presents a significant 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 added. “Enabling more payment options has the potential to help airlines realize some of this lost revenue.”