Why hospitality payments are so complex (and what to do about it)

Payrails will be in Berlin for ITB this March, meeting with hospitality and travel platforms that are trying to do something deceptively hard: grow.

Grow into new markets. Add distribution. Improve margins. Launch new products without turning every operational edge case into a support ticket, a manual workaround, or a quarter-long engineering program.

In many of those conversations, payments shows up as a theme even when it is not the agenda. Not because platforms are excited to “talk payments,” but because the payment layer sits underneath some of the most business-critical workflows in hospitality: guaranteeing reservations, handling changes and cancellations, supporting multiple distribution paths, and keeping finance operations sane.

What tends to break is not the basic ability to accept a card. The friction shows up in everything around it: storing credentials securely, managing pre-authorizations and incremental charges, dealing with refunds and no-shows, handling OTA virtual cards, resolving disputes, and reconciling activity across systems that were never designed to agree with each other.

Why hospitality payments keep getting harder to manage

Hospitality platforms rarely deal with a single, clean transaction.

They manage long-lived journeys that stretch across time and systems:

• Guest: Credentials, identity, and stored payment methods need to persist safely across touchpoints.
• Booking: Reservations are guaranteed with pre-authorizations, deposits, and different pay-at-book vs pay-at-stay models.
• Stay: Incremental charges, incidentals, extensions, and split folios create ongoing adjustments.
• Change: Modifications, cancellations, no-shows, and rebooks trigger refunds, re-authorizations, and recalculations.
• Settlement: Payout timing, reconciliation, disputes, and channel-specific quirks must tie back to the original context.

Over the last few years, the pressure has increased. Cross-border demand is higher. Distribution is more fragmented. Local payment preferences matter more. Fraud patterns evolve faster. Meanwhile, platforms are expected to expand internationally while keeping cost-to-serve under control.

This is also where many platforms hit an uncomfortable reality: a lot of the tokenization infrastructure used across hospitality was chosen 10–15 years ago for a very specific reason, which was to reduce PCI scope through “out-of-scope” providers.

Those providers served the market well for a time, but many were built for an earlier era, with legacy architecture and limited extensibility. When the underlying token layer ships slowly, lacks clean APIs, or becomes a reliability risk, it turns into something bigger than a compliance decision. It becomes a constraint on how quickly the platform can change, and how confidently it can scale.

The hidden cost: when “good enough” payment infrastructure becomes a growth tax

The cost of a legacy vault layer rarely appears as a single line item. It appears as drag.

A new market launch becomes dependent on one provider’s capabilities and timelines. Adding a second PSP feels like a migration instead of an optimization. A routing change becomes risky because tokens cannot move cleanly. Incidents in the token layer create outsized operational disruption because everything upstream depends on it, from check-in flows to customer support to refunds.

Over time, finance and operations teams end up absorbing the complexity. Reconciliation becomes a stitching exercise across multiple sources of truth. Exceptions pile up. Manual work grows. The platform pays twice: once for the tooling, and again in slower execution and higher operational load.

Tokenization in hospitality: why first-party PSP vaults create lock-in (and what to do instead)

A parallel shift on tokenization is playing out in the market, and it targets the exact pain point platforms are trying to solve: how do you store credentials once, then use them everywhere the business needs to sell and collect money?

PSPs have a clean answer: put the vault inside the PSP. It reduces PCI scope, speeds up go-live, and gives teams fewer moving parts on day one.

When a PSP owns your vault, you can get live faster. But you are also building long-term dependency into the most sensitive part of your payments stack: saved credentials.

That shows up later as real cost and real friction:

• More time and engineering to expand: Adding a new PSP for a new country can become a “move the vault” project instead of a simple integration.
• Less leverage on fees and performance: It is harder to route to the best-performing or lowest-cost provider if the tokens are locked somewhere else.
• Slower optimization cycles: Simple changes (retries, failover, routing tests) become harder to run safely at scale.
• Higher operational risk: If a PSP has an outage or a sustained dip in approvals, switching is slower because you are not just flipping an integration.
• Less control over the experience: Constraints in the vault layer start dictating what you can offer guests, merchants, and properties.

For hospitality platforms, optionality is not a nice-to-have. It is what keeps expansion fast, performance tunable, and dependency risk manageable.

What a modern token vault looks like in hospitality terms

A modern token vault for hospitality should behave like platform infrastructure: flexible, reliable, and designed around the workflows that actually exist in the travel stack.

Three principles matter:

• First, the vault must be API-first and PSP-agnostic, with portable tokens that can work across multiple providers. That is what makes multi-PSP strategies practical rather than theoretical, and it is what enables routing and intelligent retries without tying the platform’s hands.
• Second, the vault needs a hospitality-ready model that can represent the way money moves through bookings and stays. In practice, that means being able to maintain context (guest, booking, stay) and support the operational workflows that sit on top of those entities, instead of treating every payment as a generic one-off event.
• Third, reliability has to be enterprise-grade. In peak season, “mostly fine” is not fine. A failure in the token layer does not just affect payment acceptance. It affects check-in, refunds, customer support load, and the trust a platform has built with properties and partners.

A fourth point is increasingly important too: platforms need help downstream. Tokenization decisions often surface later as finance work. Reconciliation, settlement mapping, payouts, and exception handling are where operational complexity becomes visible, and where a platform either builds leverage or accumulates manual overhead.

Payrails: The platform-grade infrastructure for hospitality payments

Payrails is one example of what this “platform-grade” approach looks like in practice.

It is designed for platforms that need control and portability, but do not want to spend the next two years stitching together a vault, routing logic, retries, and the operational workflows that sit downstream.

In practical terms, the goal is simple: treat tokenization and orchestration like infrastructure. Keep it stable underneath so the business is not forced into a migration project every time a PSP changes direction.

What that enables is straightforward and measurable:

• Lower operational overhead: Fewer brittle tools in the middle, less manual handling across refunds, changes, exceptions, and support workflows.
• Better payment performance: Portable tokens make multi-PSP routing and retries practical, which helps improve approval rates and reduce avoidable declines.
• Faster execution: Add PSPs, update rules, and change flows without waiting on one provider’s roadmap or release cycles.
• Cleaner global expansion: Enter new markets by adding providers and payment methods without rebuilding the foundation each time.
• Less finance and ops drag: Connect tokenization to reconciliation, settlement mapping, and exception handling so issues do not pile up in spreadsheets.

This matters because platform buyers are evaluating more than feature sets. They are evaluating time-to-onboard, reliability under load, resilience when something changes, and whether the platform can keep scaling without drifting into long-term dependency on a single PSP ecosystem.

Conclusion: A quick gut-check for hospitality platforms

If the current setup is starting to create drag, the signals are usually familiar. Most teams can point to a few “we should not be spending time on this” moments:

• PSP changes feel painful: Even small changes require long projects, careful sequencing, and internal coordination.
• Adding providers is an engineering program: New regions or new payment methods trigger months of work because credentials and flows are tightly coupled.
• Routing and retries are limited: You know performance could improve, but the stack does not let you test and tune safely.
• Incidents have an outsized blast radius: A PSP issue turns into guest-facing disruption, a support spike, and operational triage.
• Refunds, cancellations, and changes are messy: Edge cases drive manual work and inconsistent outcomes.
• Finance is stuck stitching the truth together: Reconciliation, settlement mapping, and dispute workflows take too long and break too often.

These are not “payments problems” in isolation. They are business constraints.

They show up as platform cost (more manual ops, more support load, more engineering time spent on payment edge cases), platform velocity (slower launches, slower market expansion, slower iteration on routing and retries), and ultimately business-level risk.

And because these issues compound over time, they quietly put a ceiling on growth: you can only scale as fast as your payments stack can absorb change.

Meet Payrails at ITB Berlin

If you will be at ITB (3–6 March) and your platform is feeling the strain of growth, we would love to compare notes.

A good first conversation is business-first: where expansion, distribution, and guest experience are getting slowed down by payment and reconciliation complexity, and what it takes to remove that drag without creating new dependencies.

If any of the above challenges resonate, come and talk to us at Hall 7.1c, Booth 119 at ITB.  You can also book a meeting in advance using the link below.

Book a meeting here