Introduction

For years, payment innovation was largely happening behind the scenes. The focus was on making transactions faster, more secure and more reliable. Guests rarely thought about the systems making payments happen, as long as the process worked.

Today, that expectation has changed.

Payments have moved much closer to the center of the customer experience. A guest deciding whether to book a room, add an upgrade, purchase an experience or complete a transaction is not only influenced by what is being offered, but also by how easy it is to say yes.

In hospitality, that shift is becoming increasingly important. As hotels digitize more parts of the guest journey, payment technology is evolving beyond a final step in the booking process to become a strategic tool that influences conversion, revenue and guest satisfaction.

To explore how payments are changing the way hotels engage with guests, we spoke with Erik Tengen, President, Hospitality Upsell, Plusgrade, about the trends shaping the next generation of payment experiences, from automation and smarter fraud prevention to digital wallets and more flexible ways for guests to complete purchases.

According to Tengen, the biggest change is a simple one: payment is no longer just about completing a transaction. It is about removing friction at the exact moment a guest has decided they want something.

In 2026, three trends are helping redefine the role of payments in hospitality: automation, intelligent fraud prevention and the continued rise of digital wallets and alternative payment methods.

Each is changing a different part of the guest journey, but together they point to the same conclusion: payment is no longer a neutral step that happens after the important decisions have already been made. It has become part of the decision itself.

Payments are no longer a back-office function

Historically, payments were viewed as a financial process that happened after the guest had already made a choice. The real work, in this view, was creating demand. Once a guest wanted something, payment was simply the final step.

That mindset is changing.

Today, the payment experience itself can determine whether a transaction is completed or abandoned. A guest might be interested in an upgrade, an additional experience or a premium service, but if the payment process feels complicated, slow or uncertain, that moment of interest can disappear.

As Tengen explains:

“ What stands between a conversion and a drop off isn’t the value of what’s on offer. It’s whether paying felt as simple as deciding.”

For hotels, this means payment optimization is no longer just about operational efficiency. It is about creating a smoother path between guest intent and action.

When a guest decides they want something, that moment represents an opportunity. But it is also a moment where unnecessary friction can quickly turn interest into abandonment.

The rise of embedded and automated payments

Consumers now expect payment experiences to feel effortless.

Across retail, travel and digital services, guests have become used to one-click purchases, saved payment details, contactless transactions and mobile-first checkout experiences. Those expectations now follow them into every part of their lives, including hotel stays.

For hospitality businesses, this means payment automation is becoming less about simply reducing manual tasks and more about creating better experiences.

Automation can help streamline payment authorization, reconciliation, refunds, chargeback management, currency conversion and reporting. But the guest does not need to see any of that complexity.

The best payment experiences are often the ones guests barely notice.

They simply experience a process that feels quick, simple and trustworthy.

The hidden cost of payment friction

One of the biggest challenges facing hospitality is not whether technology exists. It is whether different systems work together.

Guests interact with multiple platforms throughout their journey, including booking engines, online travel agencies, property management systems, payment providers and loyalty platforms.

When these systems operate separately, the guest experience can become fragmented.

A traveler might enter payment details when making a reservation, be asked for the same information again during check-in, and then face another payment process when purchasing an upgrade or additional service during their stay.

Every extra step creates friction.

And every moment of friction creates an opportunity for a guest to reconsider.

As Tengen highlights, the issue is often not a lack of guest demand. The guest may already want to make the purchase. The challenge is whether the technology makes it easy enough for them to complete it.

This fragmentation also creates challenges for hotels. When payment and guest behavior data sit across disconnected systems, it becomes harder to understand which offers perform best and where revenue opportunities are being lost.

The guest wanted to buy. The system simply made it harder than it needed to be.

Fraud prevention becomes smarter

As digital payments continue to grow, so does the importance of protecting transactions.

Traditional fraud prevention often relied on predefined rules and manual reviews. While these approaches provided protection, they could also create unnecessary friction by flagging legitimate customers who did not fit a specific pattern.

Modern fraud prevention is becoming more intelligent.

Using artificial intelligence and behavioral analysis, payment systems can assess a much wider range of signals in real time, including transaction patterns, device information, location, account behavior and purchasing history.

The goal is not simply to block suspicious activity. It is to protect revenue while making sure genuine guests can complete purchases without unnecessary obstacles.

A declined transaction does not only impact a single sale. It can also damage trust at the exact moment a guest is trying to engage further with a hotel.

The strongest payment strategies therefore balance security with convenience, ensuring protection does not come at the expense of experience.

Digital wallets move into the mainstream

Digital wallets have quickly moved from being an alternative option to becoming an expected part of the payment landscape.

For travelers, they provide convenience, especially when booking or purchasing on mobile devices. They reduce the need to repeatedly enter payment details while offering additional security through technologies such as tokenization.

For hotels, they can support conversion by making it easier for guests to complete purchases in the moment.

This is particularly valuable for impulse decisions, such as adding an experience, upgrading a room or purchasing an additional service. These decisions are often influenced by how simple the process feels.

However, flexibility is extending beyond digital wallets.

Tengen also points to the growing role of loyalty currencies as payment options. Travelers may hesitate to spend additional cash on an upgrade but may be more willing to use loyalty points because they perceive the value differently.

The wider trend is clear: guests increasingly expect choice, not only in what they purchase but in how they pay for it.

The future of payment timing

Another major shift may not be about how guests pay, but when.

Traditionally, payment has been treated as something that happens after a decision has been made. The guest chooses, then pays.

The future of payments is moving toward a more integrated experience where payment happens naturally within the moment of intent.

Rather than asking guests to return later or complete multiple steps, payment becomes part of the decision itself.

This matters because every additional step between wanting something and completing the purchase creates another chance for the guest to pause, get distracted or change their mind.

The smoother that journey becomes, the more likely hotels are to convert interest into revenue.

Flexibility will define the next generation of payments

As hospitality becomes more personalized, payment flexibility will become an increasingly important differentiator.

Guests will continue to expect options that match their preferences, whether that means digital wallets, loyalty currencies, alternative payment methods or mobile-first experiences.

The hotels that succeed will be those that create flexibility not only in what they offer, but also in how guests complete the purchase.

As Tengen observes:

“The hotels that pull ahead will pair flexibility in what they offer with flexibility in how guests pay.”

Conclusion

The future of payments is no longer just about processing transactions.

Automation is reducing complexity, intelligent fraud prevention is strengthening trust, and digital wallets are reshaping guest expectations.

More importantly, hotels are recognizing that payment experiences directly influence conversion, revenue and satisfaction.

The way a guest pays has become inseparable from how they feel about the purchase itself.

As payment journeys become more seamless, flexible and embedded into the guest experience, the line between payment and commerce will continue to blur.

The hospitality businesses that embrace this shift will be the ones best positioned to meet the expectations of tomorrow’s travellers, where every interaction is simpler, smarter and designed around the guest.

The future of payments: From transaction processing to guest experience