The landscape of travel payments is shifting, but not as dramatically as some might expect. According to the International Air Transport Association's (IATA) 2025 Global Passenger Survey, the preference for digital wallets in travel payments has climbed to 28%, up from 20% in 2024. However, credit and debit cards remain the dominant choice, with 72% of respondents favoring them, albeit down from 79% the previous year.
This data paints a picture of evolution rather than revolution. Digital wallets are increasingly used at airline checkouts, offering convenience and security through tokenization. Yet, the underlying financial infrastructure often still relies on card networks or bank accounts. The emerging model is less about replacing cards with phones and more about creating a unified interface that integrates payment, identity, and loyalty — though this vision faces significant hurdles, especially across borders.
Streamlined Checkout Experience
Airline tickets and hotel bookings are high-value, complex transactions that typically require billing addresses, fraud checks, passenger details, currency conversion, and strong customer authentication. Digital wallets simplify this by storing payment information and enabling approval through device security methods, reducing friction compared to manual card entry. Tokenization, as explained by EMVCo, replaces the primary account number with a unique token restricted to a specific device, merchant, or use case, thereby reducing the exposure of sensitive payment data.
However, tokenization does not eliminate all risks. Fraudulent merchants, compromised accounts, or authorized transfers to scammers remain concerns. Moreover, the adoption of wallets is uneven across regions. IATA's 2025 payments presentation highlights that 46% of Asia-Pacific passengers prefer wallets, surpassing the global average of 28%, and the figure jumps to 63% among travelers aged 25 or younger in that region. In contrast, Europe remains more card-centric, underscoring the need for travel companies to tailor payment options to regional preferences.
Bridging Local QR Networks
One of the biggest challenges is the fragmentation of local QR payment systems. While domestic QR wallets are widely accepted by small merchants in many Asian countries, they are often inaccessible to international visitors due to banking restrictions. To address this, payment networks like Mastercard have launched programs such as Pay Local, which allows travelers to link their Mastercard to participating wallets and use local QR systems. This initiative currently covers wallets in Cambodia, China, Hong Kong, Indonesia, and Malaysia, expanding acceptance without requiring merchants to install new terminals.
Nevertheless, a universal wallet remains a distant goal. A March 2026 Bank for International Settlements paper identified limited interoperability as the most significant constraint on cross-border payments, alongside differing compliance regimes and institutional rules. Bilateral QR links and card-to-wallet bridges can improve specific corridors, but they do not eliminate onboarding requirements, foreign-exchange costs, or disparities in merchant acceptance.
Convergence of Payment and Identity
The convergence of payment and identity is another transformative trend. In IATA's 2025 survey, 78% of passengers expressed a desire for a smartphone that combines a digital wallet, digital passport, and loyalty cards for booking, payment, and airport processes. This would allow travelers to share verified credentials — such as identity, visa status, frequent-flyer membership, or boarding authority — with relevant parties, reducing the need to present multiple documents.
This concept has moved beyond theoretical discussions. In October 2024, IATA conducted a proof of concept with two passengers on a Hong Kong–Tokyo round trip. The trial involved two wallets carrying seven verifiable credentials, including passport, visa, frequent-flyer, and boarding-pass information, with a trust registry verifying issuers. While the trial demonstrated technical feasibility in live airport systems, it also highlighted the gap between a successful pilot and mass deployment.
Government infrastructure is advancing at a different pace. ICAO launched a next-generation Public Key Directory in March 2026 to help authorities authenticate electronic passports and other digital travel documents. However, in the European Union, the Commission's current digital travel credential manual indicates that no member state is yet using these credentials, with the planned EU Digital Travel app not expected until the end of 2030. Payment adoption can move quickly, but border credentials require legal frameworks, common standards, and government trust.
Understanding Fees, Refunds, and Fraud
Travelers must also be aware of the financial implications of wallet transactions. Whether a purchase is made via a tokenized credit card, debit card, prepaid balance, or person-to-person app transfer, the fees, dispute paths, and legal protections can vary significantly. The wallet's logo does not clarify who handles currency conversion, foreign-transaction fees, or chargebacks.
Refunds can be less transparent than the initial payment. Google's refund guidance notes that approved refunds are returned to the original payment method and may appear on the bank or card statement rather than in the wallet's transaction history. Travelers are advised to retain booking confirmations, merchant receipts, and the last four digits or virtual-card references until refunds are processed.
Scam risks also depend on how wallets are used. The US Federal Trade Commission warns that rental owners or package sellers who insist on payment apps, wire transfers, gift cards, or cryptocurrency are likely scammers. A legitimate wallet button on an airline's official checkout is generally safe, but travelers should remain vigilant.
In conclusion, while digital wallets are gaining traction in travel payments, they are not displacing cards. Instead, they are becoming an additional layer of convenience, with tokenization and identity integration enhancing security and efficiency. However, the path to a seamless, universal wallet is fraught with technical, regulatory, and practical challenges that will likely keep cards relevant for years to come.
