Hidden Costs Emerge as Cross-Border Fees Undermine Virtual Card Benefits in Travel Payments

Virtual cards represent more than incremental improvement in travel B2B payments, they enable a fundamentally different operating model built on automation, security, and financial transparency.

As the technology matures and provider capabilities diverge, travel industry stakeholders must look beyond surface-level features to understand total cost of ownership, particularly for cross-border transactions.

Hidden fees

Most card providers charge substantial fees on international transactions, representing 6-8% of the transaction value, making them far more expensive than they initially appear.

These additional fees often include:

• Transaction Fees: Many cards levy flat fees of 2-3% on every cross-border transaction simply for processing the payment in a foreign currency.
• FX Spread Mark-ups: The more insidious cost is foreign exchange spread. While providers may advertise ‘competitive’ exchange rates, most mark up the interbank rate by 3-5%. This means a business converting ZAR to EUR might pay 5% above the real market rate – a hidden tax on every international booking.

For agencies processing significant international travel volume, these fees quickly become prohibitive, eroding the rebate benefits that made virtual cards attractive in the first place.

What VCC works best for agents

When agents are looking to adopt VCC technology, it is important to look for providers who offer features that make cross-border transactions seamless.

Capabilities to look out for include:

Direct Reserve Bank reporting: Providers should hold the regulatory approvals necessary to report third-party transaction data directly to the South African Reserve Bank. This is crucial for cross-border compliance under South African exchange control regulations. When a travel agency processes international bookings on behalf of corporate clients, detailed transaction reporting to SARB is mandatory for Balance of Payments tracking.

Most virtual card providers lack this capability, forcing travel agencies to handle compliance separately, creating an administrative burden and limiting the transaction values they can process.

Real FX rates with zero mark-up: Suppliers can charge for FX spreads, so it is important to look for a provider that offers the real interbank exchange rate at the time of transaction with zero mark-up. When a booking requires currency conversion, this will enable the business to pay the actual market rate – the same rate banks use when trading with each other.

High supplier acceptance: The provider should invest in building strong relationships with travel suppliers globally, ensuring high acceptance rates across airlines, hotels, car-rental companies and other travel service providers. This reduces payment friction and eliminates the frustration of generating a virtual card only to discover the supplier won't accept it.

Agency-controlled banking infrastructure: Unlike platforms where funds flow through provider-controlled accounts, find a provider that issues the bank account in the agency's name. This allows the agency to maintain direct control over its funds, providing transparency, simplified accounting and peace of mind. This structure also means agencies can move money in and out freely without restrictions or approval delays.

Instant local funding: Use a supplier that provides a local South African bank account, which enables instantaneous funding via EFT. This will allow agencies to transfer money into their account and have it available for card issuance within minutes – not hours or days. Similarly, withdrawing excess funds back to the agency's operating account happens quickly through standard EFT rails.

Flexible card issuance: Find a provider that accommodates different operational models through multiple issuance methods, including manually through the web interface for ad-hoc bookings, automatic high-volume issuance via API integration, or uploading batch files for processing multiple bookings simultaneously. This flexibility means the platform adapts to existing workflows rather than forcing process changes.

Configurable security controls: The provider should offer OTP (one-time password) authentication that can be configured to match the agency’s requirements. This streamlines operations so that agencies can enable frictionless processing that eliminates OTP friction entirely. The choice belongs to the agency, based on its risk tolerance and operational preferences.

Reporting and analytics: Use a supplier that offers advanced reporting and historical data access. Agencies can generate detailed transaction reports, reconciliation exports, spending analytics and compliance documentation without restrictions. This ensures that finance teams have complete visibility into payment activity for accounting, auditing and strategic planning purposes.

The choice of virtual card provider can mean the difference between saving money and inadvertently increasing costs – or between seamless operations and constant friction.

Glyde has engineered its virtual card platform specifically for the travel industry's unique requirements, delivering these basic requirements and additional differentiators that go far beyond basic payment functionality.

The regulatory landscape, cross-border compliance requirements, and hidden fee structures mean that not all virtual cards deliver equivalent value.

For South African travel businesses, selecting a provider with proper regulatory integration, transparent pricing, and industry-specific features isn't optional – it's essential to realising the promise of virtual card technology.

As corporate travel continues its digital transformation, virtual cards will increasingly become standard infrastructure rather than innovative edge cases.

The question for travel management companies is no longer whether to adopt virtual cards, but which provider's capabilities align with their specific operational needs, transaction patterns, and compliance obligations.

In a market where hidden fees and operational friction can quickly erode theoretical benefits, platforms purpose-built for travel industry requirements offer the clearest path to sustainable competitive advantage.