The Rise of Real-Time Payments in Travel: FedNow, SEPA Instant, and UPI Transform B2B Settlement

The Legacy Settlement Problem

The global travel industry moves more than $5 trillion annually through its supply chain—from travelers to OTAs, from OTAs to airlines, hotels, and ground transportation providers. Yet despite the enormous volume, the settlement infrastructure underpinning these B2B payments has remained stubbornly archaic. Most travel supplier payments still rely on batch-processed wire transfers, ACH debits, or monthly billing cycles through intermediaries like IATA’s Billing and Settlement Plan (BSP) for airlines or banking clearing houses for hotels.

The consequences of slow settlement are significant. Small and medium-sized suppliers—independent hotels, tour operators, local transport companies—often wait 30 to 90 days to receive payment for services they have already delivered. This cash flow gap forces them to take on expensive short-term debt, accept unfavorable commission structures, or limit their inventory availability on platforms that pay slowly. For the travel ecosystem as a whole, slow settlement increases systemic financial risk and reduces the competitiveness of smaller, often more authentic and distinctive suppliers.

The Real-Time Payment Revolution

Over the past five years, central banks and banking consortia around the world have launched domestic real-time payment (RTP) systems that enable instant, irrevocable, 24/7 bank-to-bank transfers. The three most significant systems for the travel industry are:

SEPA Instant Credit Transfer (Europe): Launched by the European Payments Council, SEPA Instant enables euro-denominated transfers of up to €100,000 to settle in less than 10 seconds, 24 hours a day, 365 days a year. Over 2,500 payment service providers across the Eurozone now support SEPA Instant, covering the majority of European bank accounts. For travel companies operating in Europe, SEPA Instant provides a near-universal mechanism for instant supplier payments.

FedNow (United States): The Federal Reserve launched FedNow in 2023 as the first government-operated instant payment service in the US. FedNow enables real-time, final settlement of USD payments between participating banks. While adoption is still growing (not all US banks are connected yet), FedNow is rapidly becoming the backbone of modern B2B payments in the US travel market, replacing slow ACH batch transfers that previously took 1 to 3 business days.

UPI (India): India’s Unified Payments Interface, developed by the National Payments Corporation of India (NPCI), is the world’s most successful real-time payment system by volume, processing over 10 billion transactions per month. UPI enables instant bank-to-bank transfers via mobile phone, using a simple virtual payment address (VPA). For the rapidly growing Indian travel market—expected to become the world’s third-largest by 2030—UPI is the dominant payment method for both consumer bookings and B2B supplier settlements.

How Travel Companies Are Adopting RTP

Forward-thinking travel companies are integrating RTP rails into their supplier payment workflows to gain competitive advantages:

Instant Post-Stay Settlement for Hotels: Instead of paying hotels on a monthly billing cycle, OTAs can trigger an instant payment via SEPA Instant or FedNow immediately after a guest checks out. The hotel receives funds within seconds, improving their cash flow and strengthening the commercial relationship. OTAs that offer instant settlement can negotiate better net rates from suppliers, as the suppliers value payment certainty and speed.

Real-Time Commission Distribution for Tour Operators: When a traveler books a multi-component package (flight + hotel + tour), the OTA can use RTP to distribute each supplier’s share of the payment in real-time at the moment of booking confirmation. This eliminates the need for complex monthly reconciliation cycles and reduces disputes over commission calculations.

Dynamic Refund Processing: When a booking is cancelled and a refund is due, RTP enables the travel company to return funds to the customer’s bank account instantly, rather than initiating a card refund that takes 5 to 10 business days to appear. Instant refunds dramatically improve customer satisfaction and reduce the likelihood of chargeback disputes filed by impatient customers.

Technical Integration Considerations

Integrating RTP into existing travel payment systems requires careful technical planning. Key considerations include:

• Payment Initiation APIs: Travel companies need to integrate with their bank’s RTP payment initiation API, or use a fintech middleware provider that aggregates access to multiple RTP networks through a single API.
• Irrevocability: Unlike card payments, which can be reversed through chargebacks, RTP transfers are final and irrevocable once settled. This means travel companies must implement robust pre-payment validation checks to ensure correct amounts, recipient details, and authorization before initiating a transfer.
• 24/7 Operations: RTP systems operate around the clock, including weekends and holidays. Travel companies must ensure their payment operations and monitoring systems can handle real-time settlement outside of traditional banking hours.
• Reporting and Reconciliation: Each RTP network provides structured payment status messages and unique transaction identifiers. Travel companies must update their reconciliation systems to ingest and match these real-time confirmations against booking records.

The Future of B2B Travel Settlement

As RTP coverage expands globally—with new systems launching in markets like Brazil (Pix, already live), Australia (NPP), and across Southeast Asia—the vision of a fully real-time travel supply chain is becoming achievable. Within the next five years, the industry will likely see a significant shift from batch-based monthly settlements to real-time, transaction-level payouts, fundamentally changing the financial dynamics of the global travel ecosystem.