VCC (Virtual Credit Card)
A VCC (Virtual Credit Card) is a single-use, digitally generated card number that an OTA or travel intermediary issues to pay a hotel for a specific reservation. Instead of the guest paying the property directly, the OTA collects payment from the guest (the merchant model), then creates a virtual card loaded with the net amount owed to the hotel — typically the room rate minus commission. The card carries its own number, expiry date, and CVC, is restricted to a set amount and activation window, and is charged by the hotel like any other card payment, usually on or after check-in.
VCCs are the dominant settlement method for merchant-model OTA bookings from platforms such as Expedia (Hotel Collect vs. Expedia Collect), Booking.com's Payments platform, and most bedbanks and wholesalers.
Example
A guest prepays €500 for a two-night stay booked on an OTA under the merchant model. The OTA's commission is 20%. The hotel receives a VCC loaded with €400, activated on the check-in date. The front office charges the card at check-in like a normal credit card, and the property's card acquirer settles the funds — minus the hotel's own card processing fee of roughly 1.5–2.5%.
Why it matters
VCCs shift payment collection, fraud risk, and currency handling to the OTA, and spare hotels from chasing guest payments on prepaid bookings. But they carry real costs and operational friction: the hotel pays card acquiring fees on top of OTA commission, effectively raising the cost of distribution; cards can fail if charged outside the activation window or for the wrong amount; and reconciliation between PMS reservations, VCC charges, and OTA statements is a common source of leakage. Finance teams increasingly track VCC processing costs as a distinct line in the cost of distribution, and some negotiate direct bank transfer settlement to avoid them.
Related
- Merchant Model — the OTA business model that VCC settlement supports
- Cost of Distribution — VCC acquiring fees add to the true cost of an OTA booking
- NRevPAR — net revenue metrics should account for VCC processing fees
- Wholesale / Net Rate — bedbank bookings are also commonly settled by VCC