Payment Gateways for UK Hotels | Antravia UK

Payment Gateways for Hotels

Running a hotel in the UK is about far more than presentation. A smooth payment process is as essential as a clean room. Whether you’re managing a boutique inn in the Cotswolds or a city property in Manchester, the way you process guest payments directly impacts your cash flow, reputation, and profitability.

According to UKHospitality, direct online bookings reached around 45% of total hotel reservations in 2025, reflecting a clear shift away from third-party dependence. Yet many hotels still lose between 3–5% of their RevPAR to payment inefficiencies, and this is often due to avoidable gateway fees, FX losses, or delays in settlement.

Imagine a corporate group checking in for a conference: payments authorised instantly, the PMS updated in real time, and the front desk free to focus on service rather than reconciliation. That’s the standard modern hotels should aim for.

This guide explains what UK hotels need to know about payment gateways, from transaction models and fee structures to reconciliation under PSD3 and GDPR. We’ll compare key processors such as Stripe, Adyen, and PayPal, outline chargeback prevention strategies, and show how to align gateway setup with your revenue model and accounting systems.

Understanding Payment Gateways in the Hotel Landscape

Payment gateways bridge your booking engine, PMS, and point-of-sale systems. They need to handle multiple currencies, typically GBP, EUR, and USD, while ensuring secure authentication and compliance.

Under PSD2 and the upcoming PSD3, Strong Customer Authentication (SCA) applies to all online payments. Tokenisation now plays a central role for “card on file” loyalty members, and contactless transactions represent over 65% of in-person payments, according to Barclaycard’s 2025 data.

In practical terms, this means your gateway should:

• Support both in-person and online payments (e.g., integrated POS and booking engine flows)

• Authenticate guests securely without friction

• Tokenise recurring and pre-authorised transactions

• Manage consent and data storage in line with GDPR

Transaction fees typically range between 1.5% and 3%, but these vary depending on card origin. Post-Brexit, many gateways charge higher fees for non-UK cards, so properties with high EU traffic should review their rates regularly.

Gateways offering alternative payment methods (APMs) such as Apple Pay, Google Pay, or Klarna can also lift conversion rates. Hotels that introduced Klarna or Pay-in-3 in 2025 saw a 15% increase in premium suite bookings, as guests spread costs over time.

Merchant of Record vs Pass-Through: Choosing the Right Model

Your payment model depends on your booking mix and how much business comes directly versus through online travel agencies (OTAs).

Pass-through means funds go directly from the guest to the OTA, which later pays you (minus commission). It simplifies VAT under the Tour Operators’ Margin Scheme (TOMS) but can delay cash inflows by up to three weeks. It’s typically used where OTAs generate over half of your occupancy.

Merchant of Record (MoR) means your hotel takes the payment directly, records the full sale, and remits supplier costs. You have control over pricing, deposits, and refunds, and you recognise the revenue immediately. However, this also means taking on the legal and compliance burden, including refunds under the Consumer Rights Act 2015 and AML checks under the Money Laundering Regulations 2017.

Hotels that transitioned to MoR models in 2025 reported margin increases of up to 28% (AHLA data), largely because they could package and price more flexibly. For many UK independents, a hybrid setup works best and gateways like Adyen allow toggling between models per transaction, giving both control and flexibility as PSD3 moves toward biometric authentication.

Comparing Gateway Costs: Stripe, Adyen, PayPal, and Nuvei

Average effective rates for UK hotels sit around 2.2%, often higher for properties with international guests. Here’s a snapshot of the main players:

• Stripe:

  • 1.5% + £0.20 for UK cards

  • 2.5% + £0.20 for EU cards

  • 3.25% + £0.20 for international cards

  • In-person via terminal: 1.4% + £0.10

  • Radar fraud protection: £0.02 per transaction

  • No monthly fees for turnover below £500,000

• Adyen:

  • Interchange-plus pricing (0.2–1.5%) + 0.11% + £0.10

  • FX fees 0.6–1.2%, SCA surcharges around 0.1%

  • PCI compliance audits typically £400 per year

  • Advanced routing automatically splits bar or spa transactions by department

• PayPal:

  • 2.9% + £0.30 domestic, +1.5% international, 3–4% FX

  • Instant transfer fee 1% (min £0.89)

  • Convenient for small transactions and tipping but inefficient for large events or groups

• Nuvei:

  • 1.5% + £0.20 base rate, with discounts for >£80k monthly volume

  • £0.15 per refund or reversal

  • Often negotiable, especially for independent hotels

Always review the “extras” - currency conversion spreads, instant payout charges, or SCA surcharges can quietly add 0.1–0.3% per booking.

Managing Chargebacks and Protecting Seasonal Revenue

Chargebacks remain a major hidden cost for hotels, with average rates around 0.9% so double the retail average, and typical transaction values of about £95. Most arise from “non-delivery” disputes following cancellations or no-shows.

Under PSD3, chargeback windows extend to 120 days, and if you act as the Merchant of Record, you bear both the liability and the administrative cost and this is often £12–£20 per case. For a 150-room property at 75% occupancy, that’s roughly £18,000 per year in potential losses.

To reduce exposure:

• Enforce clear cancellation and refund policies (ideally 72-hour notice)

• Keep dated email confirmations as proof

• Enable SCA to cut unauthorised use (Adyen tools report up to 35% fewer disputes)

• Maintain full audit trails for GDPR compliance

Keeping your rate below 1% helps avoid network penalties and keeps your merchant status secure.

Streamlining Reconciliation and Accounting

Reconciling daily desk takings, OTA remittances, and folio charges can consume hours, and errors here often distort VAT and TOMS reporting. Under PSD3, regulators are expected to push for near real-time reconciliation.

Integrating your payment gateway directly with Sage, Xero, or QuickBooks can automate this process. For example:

• Automatically match a £350 guest payment to a £315 net receipt (after fees)

• Track weekly inflows and FX adjustments (1.5% swings are common)

• Batch transactions by folio or booking source

• Export VAT-ready data into your accounting system within three hours

This not only reduces reconciliation time but ensures compliance if HMRC audits your TOMS calculations or deferred income balances.

Preparing for PSD3 and Strengthening Financial Control

The next evolution of payment rules under PSD3 (expected rollout 2026) will raise compliance expectations across authentication, chargeback handling, and real-time data visibility. Hotels that prepare now, by upgrading gateways, auditing fee structures, and integrating accounting systems, will see smoother operations and stronger guest trust.

At Antravia UK, we help hotels assess their current payment setup, model the financial impact of each gateway, and design reconciliation processes that align with accounting best practice.

If your payment costs or chargebacks are quietly eating into profit, now is the time to review them.

References

1. Stripe UK Pricing: https://stripe.com/gb/pricing

2. Adyen Pricing: https://www.adyen.com/pricing

3. PayPal UK Fees: https://www.paypal.com/uk/digital-wallet/paypal-consumer-fees

4. PSD3 Regulations: https://www.fca.org.uk/firms/payment-services-regulations

5. GDPR for Hotels: https://hoteltechreport.com/news/data-protection-act

6. Merchant Models: https://www.wexinc.com/resources/blog/merchant-vs-agency-model-travel-payments/

7. Chargeback Trends: https://www.chargeflow.io/blog/chargeback-statistics-trends-costs-solutions

8. Reconciliation Practices: https://www.payrails.com/blog/hospitality-payment-report

9. Nuvei for Travel: https://www.nuvei.com/posts/payment-processing-for-the-travel-industry

10. UKHospitality Data: https://www.ukhospitality.org.uk/insights-and-reports

Disclaimer

This article is provided for general information purposes only and does not constitute accounting, tax, or legal advice. Regulations, tax rules, and reporting requirements may change, and their application can vary depending on your business structure and circumstances. Readers should seek professional guidance from a qualified accountant or adviser before making any financial, tax, or compliance decisions. Antravia UK accepts no responsibility for any loss arising from reliance on the information contained herein.