Virtual Credit Cards in Travel: Accounting Risks and Opportunities

Summary

Virtual credit cards are now widely used in travel payments, from OTAs issuing single-use cards for hotel bookings to agencies settling supplier invoices. While they solve some operational issues, they create new accounting challenges: FX mismatches, rejected payments at check-in, and breakage when cancellations occur. For travel agents and hotels, understanding how VCCs work is critical to protecting margins. This blog draws on Antravia’s research paper on VCCs to highlight the financial risks and opportunities.

Key Points

1. What are Virtual Credit Cards (VCC)

• Single-use, tokenized cards issued for a specific transaction.

• Common in OTA–hotel relationships and increasingly used by travel agencies.

• Advantages: security, fraud reduction, and payment automation.

2. Why VCCs Create Accounting Complications

• FX mismatches: card issued in one currency, used months later when rates have shifted.

• Rejections at check-in: hotels may not accept outdated or cancelled cards.

• Breakage: failed charges create reconciliation headaches for both sides.

3. Hotel Perspective

• Hotels face declined cards on arrival and additional admin to chase new payments.

• Refunds, no-shows, and modifications complicate VCC reconciliation.

• Rebate structures can incentivize agencies but reduce hotel margins.

4. Travel Agent Perspective

• Useful for controlling supplier payments and reducing fraud risk.

• Creates challenges when itineraries change, requiring new cards to be issued.

• Accounting systems must track which bookings each card relates to.

5. Reconciliation and Compliance

• Matching VCC payments to bookings is often manual and error-prone.

• Incorrect posting can distort revenue recognition and tax reporting.

• Strong systems are needed to handle cancellations, refunds, and re-issues.

6. FX and Hedging Issues

• Timing differences expose agencies to currency risk.

• Incorrect handling can lead to losses that erode commissions.

• Links with broader FX strategy, as outlined in Antravia’s white paper on FX.

7. Strategic Benefits if Managed Well

• Better fraud protection than traditional cards.

• Control over spending limits and usage windows.

• Possible rebates for larger agencies with direct issuer agreements.

8. Connection to Antravia Research

• Blog links to Antravia’s Virtual Credit Cards research paper for detailed analysis.

• The paper includes case studies and industry data that expand on the points here.

9. Final Takeaway

• VCCs are not a magic bullet.

• They improve security but create operational and accounting risks if unmanaged.

• Travel agents and hotels need systems and controls in place to avoid margin leakage.

Virtual Credit Cards in Travel: Accounting Risks and Opportunities - For Travel agents and Hotels

This blog is a high level summary of VCCs for Travel Agents and Hotels - For a more in depth look, please see our paper on VCC

Virtual credit cards (VCCs) have become a standard way to pay in travel. Agents see them every day, often without fully understanding how they work or what the risks are. High level, a VCC is a one-time-use card number created for a booking. It looks like a normal credit card, but it can only be charged once, for a fixed amount, within set dates.

For travel agents, VCCs mean security, automation, and faster supplier payments. For hotels, they guarantee funds from OTAs and agencies. Global providers like WEX, Marqeta, and AirPlus process billions in VCC transactions annually, and adoption is still growing.

But the system is not perfect. While VCCs are intended to reduce fraud and make payments easier, they also create accounting, reconciliation, and foreign exchange challenges that agents need to understand. This blog gives a practical overview of how VCCs work, the risks involved, and how you can manage them but with insights drawn from Antravia’s full research paper on virtual credit cards in travel.

What are Virtual Credit Cards?

• Single-use: Generated for one transaction only.

• Controlled: Amount, date window, and supplier are all pre-set.

• Digital: No physical card, just a 16-digit number.

They are most often used when an OTA or travel agency pays a hotel on behalf of a client. Instead of wiring money or holding credit cards on file, the agency issues a VCC, and the hotel charges it directly at check-in, or before check- in in the case of a non-refundable booking.

Why do Agents like VCCs?

• Fraud protection: A stolen VCC is useless after its one-time charge.

• Automation: Many booking platforms now create and send VCCs automatically.

• Cash flow control: You can cap the card to the exact booking value.

• Rebates: Agents can receive rebates from card issuer

This reduces the risk of fraud, cuts repeated communications with hotels, and simplifies supplier settlement.

The Accounting risks that should not be ignored

1. Foreign Exchange Mismatches

If you issue a card in dollars for a booking in euros, you are exposed to currency movements.

Example scenario:

• You confirm a $1,000 hotel booking in March, issue a VCC in dollars.

• The guest checks in in September, when the euro has strengthened.

• The hotel charges €950, which now equals $1,050.

• Result: your agency loses $50 on a single booking. Multiply this across hundreds of bookings, and the impact on your margins is clear.

2. Cancellations and Modifications

If a booking changes, the original VCC is often cancelled. A replacement must be issued. Unless this is tracked correctly, refunds can get lost or duplicated. Likewise if a booking is amended.

3. Hotel Rejections

Not all hotels handle VCCs smoothly. Smaller properties may be unfamiliar with them, and front desk staff may reject the card if it looks expired. This leads to awkward check-in issues and last-minute phone calls.

4. Reconciliation Headaches

Every VCC number needs to be matched to a booking in your accounts. Without good systems, agents can quickly lose track of which card belongs to which client. Breakage is a common result. We will soon do a blog on breakage, so subscribe to be the first to be notified!

The Hotel View

For hotels, VCCs are a mixed bag. On one hand, they mean guaranteed prepayment from OTAs or agents, which reduces credit risk. On the other hand, they often create extra work and hidden costs:

• Check-in issues: If a card is expired, cancelled, or issued in the wrong currency, front desk staff are left scrambling for payment.

• Reconciliation burden: A VCC may only cover room revenue, while extras such as meals or spa services require separate settlement. Matching these correctly can be time-consuming.

• Margin leakage: Rebates taken by agencies and processors reduce the share of value that flows to the hotel. For small, independent properties, this can be especially frustrating.

• Additional costs vs bank transfer: Additional costs with payment providers

Many hotels accept VCCs because they have little choice when working with OTAs, but the operational friction is real. Agents who understand the hotel view can improve relationships by communicating clearly and making sure properties know how to process VCCs smoothly.

How to manage VCCs without losing money

• Track carefully: Tie each card number to a booking ID in your accounting system.

• Plan for FX: Build a small margin into international bookings to cover shifts in currency rates.

• Refund process: Set a clear workflow for cancellations and replacement cards.

• Hotel communication: Confirm in advance that the property accepts VCCs, especially for high-value reservations.

Rebates: The Hidden Incentive

• Why they matter: Large agencies often earn rebates from card issuers or networks every time a VCC is used. At scale, this can be millions annually.

• Smaller agencies: Unless you have a direct Mastercard/Visa agreement, most of the rebate stays with the processor or host agency. Some pass it on, many do not.

• Accounting treatment: Rebates are income, not “extra margin.” They must be recognised properly in accounts and not relied on as guaranteed revenue.

• Hotel view: Every rebate dollar is a margin leak. Hotels often see VCCs as another layer taking value away from them.

Why this matters

VCCs are here to stay. They make payments faster, safer, and more automated, but they come with risks that can quietly erode profitability. Advisors who understand and manage those risks will keep more of their commission, avoid reconciliation nightmares, and deliver a smoother experience for clients and suppliers.

For a deeper dive into the mechanics of VCCs which includes case studies, system challenges, and the impact of rebate structures, read Antravia’s full research paper on virtual credit cards in travel.

References

• WEX Inc. – Virtual Card Solutions for Travel
  https://www.wexinc.com/solutions/corporate-payments/virtual-card/

• Marqeta – Virtual Card Issuing
  https://www.marqeta.com/solutions/virtual-cards

• AirPlus International – Virtual Cards for Corporate Travel
  https://www.airplus.com/en/virtual-cards

• Phocuswright – Travel Payments and Fintech Trends 2024
  https://www.phocuswright.com/Travel-Research/Technology-Innovation/Travel-Payments-and-Fintech-Trends-2024

• Antravia Research – Virtual Credit Cards in Travel: Ecosystem, Risks, and Future Outlook