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Virtual Credit Cards in the Hospitality Industry

Virtual credit cards have become a popular payment solution in the travel and hospitality sector, with OTAs leading the charge.

Posted 14/05/2025

Virtual Credit Cards in the Hospitality Industry

As we look to enter the new year and understand the challenges ahead, we explore one of the trends that has gained momentum in the hospitality sector – the increasing use of virtual credit cards (VCCs) by Online Travel Agencies (OTAs). While VCCs offer convenience and security for transactions, their growing prevalence poses challenges for hotels.

The Rise of Virtual Credit Cards:

Virtual credit cards have become a popular payment solution in the travel and hospitality sector, with OTAs leading the charge. These digital cards are generated for a single transaction or a limited time, adding an extra layer of security compared to traditional credit cards. OTAs leverage VCCs to streamline payment processes, reduce fraud, and enhance overall transaction security. Sounds great right? Whilst the use of these cards are beneficial to both OTA & Hotelier, they don’t come without a little pain.

Advantages for OTAs:

  • Enhanced Security: VCCs provide a secure way to handle transactions, reducing the risk of data breaches and fraud. Since each virtual card is typically used for a specific transaction or a short duration, the chances of unauthorised usage are minimised.
  • Efficient Processing: The use of VCCs facilitates faster and more efficient payment processing. This can be particularly beneficial for OTAs dealing with a high volume of transactions daily.
  • Cost Savings: Virtual credit cards can potentially reduce operational costs for OTAs by automating payment workflows and decreasing the need for manual intervention.

Challenges for Hotels:

  • Complex Reconciliation: The use of VCCs can complicate the reconciliation process for hotels, as tracking and reconciling numerous virtual card transactions require additional time and resources.
  • Payment Processing Fees: While VCCs offer advantages for OTAs, hotels often bear the brunt of associated payment processing fees. These fees, which are usually higher than traditional credit card processing fees, can impact the hotel's bottom line.
  • Complicated to process: Hoteliers are having to train their staff to be able to take VCC transactions. The training is time-consuming, and when it comes to actioning the payment, it is a manual process.
  • Delayed Payments: The automated nature of VCC transactions may lead to delays in the hotel's receipt of funds. Hotels might experience longer wait times before receiving payment, affecting cash flow and financial planning.

Conclusion:

While the adoption of virtual credit cards by OTAs signifies progress in the digitisation of the hospitality industry, it also introduces challenges for hotels. Striking a balance between the advantages of enhanced security and efficiency and the disadvantages of increased fees and potential delays is crucial for both OTAs and hotels.

As the industry continues to evolve, finding collaborative solutions that address the concerns of all stakeholders will be essential for sustainable growth and success. That’s why at Guestline, we have automated the process for actioning VCC transactions..

We expect the use of VCC to rise in 2024. With the Guestline Platform and GuestPay payment solution, you can remove the pain and reap the rewards. Guestline automates the VCC payments, making it easy and less time-consuming for you to process. No manual intervention is needed, and no headaches for your team.