OTA virtual cards, the hidden cost hospitality can no longer ignore

By James MacRae, Head of Payments at RMS Pay 

For years, Australian hospitality businesses were unknowingly absorbing millions in inflated international card fees hidden inside Online Travel Agency (OTA) bookings.

Offshore-issued virtual credit cards were bypassing domestic interchange protections, leaving operators paying significantly higher transaction costs on what were, in many cases, domestic stays.

It became a major structural problem for the hospitality sector and one many operators had very little visibility into.

Read the latest print edition of AccomNews HERE

So in 2025, we submitted detailed transaction-level evidence to the Reserve Bank of Australia (RBA), highlighting the scale of offshore OTA virtual card costs across hospitality.

The submission formed part of the broader industry push for reform, with the RBA later moving to cap interchange fees on certain foreign-issued card transactions from 2027 and reduce the excessive costs attached to OTA virtual cards.

For hospitality businesses, this is a real win and the reforms are a significant shift.

The sector has been heavily focused on the burden of OTA commissions and distribution costs and paying far less attention to the payment economics embedded within those bookings.

Yet payments have quietly become one of the fastest-growing operational costs facing hospitality businesses, particularly as margins come under pressure from labour costs, insurance, utilities and rising distribution spend.

Through our transaction analysis, we could see just how widespread the issue had become. Around one in four payments processed through the platform involved OTA-issued virtual cards, with almost all of them issued internationally through offshore structures.

The data exposed a major structural imbalance within hospitality payments, with operators effectively subsidising offshore payment models they had little visibility or control over.

The issue was not simply that the fees were high. Many operators did not even realise they were paying international card rates on bookings made by Australian travellers staying at Australian properties. Offshore OTA payment structures were effectively sidestepping domestic protections while hospitality businesses absorbed the cost.

The RBA reforms finally brought transparency and regulatory pressure to a payment structure that had quietly inflated costs across the sector for years, a problem we had consistently highlighted through detailed evidence and industry advocacy.

By capping interchange fees on certain foreign-issued transactions, the regulator has acknowledged a long-standing imbalance that unfairly shifted excessive payment costs onto hospitality businesses. Across the sector, the savings are expected to be substantial.

But the reforms also signal something much bigger: payment economics can no longer sit quietly in the background while operators focus exclusively on occupancy and topline revenue.

A booking may look profitable on paper, but once OTA commissions, marketing spend and transaction costs are fully factored in, the margin can look very different.

Operators who fail to properly understand the economics underneath each booking channel risk making increasingly poor commercial decisions as operating costs continue to rise.

At the same time, the banning of surcharges will fundamentally reshape how operators recover card costs. Businesses will no longer be able to simply pass fees directly onto guests, meaning those costs will need to be built more strategically into pricing and distribution strategy.

And this is not just happening in Australia. Regulatory pressure around interchange, transparency and cross-border payment costs is building globally.

New Zealand is introducing similar reforms, the UK continues to revisit fee caps and competition concerns, and legal pressure around interchange continues to intensify in the United States.

Payment economics are becoming a far more important commercial issue within hospitality globally, particularly as operators search for new ways to protect profitability in an increasingly competitive market.

Hospitality has long focused on the visible costs of distribution while overlooking the payment economics hidden within OTA bookings.

The RBA reforms have now forced that issue into the open and operators who continue treating payments as a background operational cost risk falling behind in an increasingly margin-sensitive market.

About James MacRae

James MacRae is Head of Payments at RMS Pay and brings deep expertise across payments, fintech and hospitality technology, with previous leadership roles at Visa and ANZ. He has become a leading advocate for payment transparency in hospitality and played a key role in driving industry reform around OTA virtual card fees in Australia.

READ: RMS pioneers integration with SiteMinder’s Smart Platform