How travel companies can use payments to strengthen customer relationships & grow their businesses

How travel companies can use payments to strengthen customer relationships & grow their businesses

By Arun Lal, Vice President of Sales & Partnerships, Ecommerce & Travel, Paysafe

Travel is no longer just a once-a-year escape. It has become a dynamic, year-round pursuit of meaningful experiences. UK consumers are at the forefront of this shift, traveling more frequently and seeking immersive, personalised journeys. Recent research shows that 94% of consumers have travelled internationally, and the average traveller now takes an unprecedented 3.9 trips per year, either domestically or abroad. As expectations grow, so does the demand for seamless digital interactions, especially during payments.

For travel agents and tour operators, payments are far more than just a background task. They play a crucial role in shaping the customer experience. In this changing landscape, optimising the payment journey is not only about convenience; it's about building trust, fostering loyalty and driving growth in the experience economy.

Payments should never be an afterthought for travel businesses, which face relatively unique transactional challenges. Navigating through these headwinds will give a travel company a competitive edge.

Liquidity: The hidden challenge behind travel payments

Liquidity remains a significant challenge for travel businesses. Operating with tight margins, travel agents and tour operators commonly face delays in accessing funds. Travel payments are considered higher risk by acquiring banks, given the time that elapses between purchasing a flight or holiday and the date of travel. Due to this, acquirers often withhold part of each transaction (a holdback) to protect against chargebacks and disruptions.

This challenge has worsened since the recent global pandemic. Many acquiring banks have exited the travel sector, leaving fewer players who now impose tougher terms and higher fees. This limits cash flow and makes it more difficult for businesses to invest in growth or manage daily operations.

To address this, forward-thinking travel companies are embracing payment orchestration, which allows a business to manage multiple payment services, including acquirers, through a single platform or interface. Using a travel orchestration platform, travel companies can route transactions to acquirers offering faster payouts and better terms.

Another solution to acquirer holdbacks is a ‘safeguarding’ model. This involves cash reserves being held in a trust and released gradually but in planned manner. Safeguarding enhances cash flow and lowers the risk of funds being locked away for long periods.

By applying these strategies, travel companies can strengthen their financial stability and set themselves up for sustainable growth.

Frictionless payments: Meeting consumer expectations

As travel becomes more experience-focused, it’s essential for businesses’ payment processes to keep up, as online checkouts that are clunky or confusing can quickly cause a booking to fall through. According to Paysafe research, 43% of consumers will abandon an online purchase if their preferred payment method isn't available. This is especially important in travel, where a fifth of consumers reportedly find booking a holiday more complicated than shopping for retail goods.

For travel agents and tour operators, streamlining the payment process is an opportunity to increase conversions and cut operational costs. A McKinsey study revealed that airlines lose the equivalent of £15bn ($20bn) annually, or 3% of their total revenue, due to inefficient payment systems.

To meet increasing expectations, businesses are adopting strategies such as storing payment details for repeat purchases and using tokenisation to safeguard sensitive data. These methods make the process smoother and help build trust. Personalised communications, such as reassuring messages or follow-up emails, can further improve the customer experience, even if a payment is declined.

By reducing friction and offering a range of secure, familiar payment options, travel companies can gain a competitive advantage at checkout.

Payment choice: Meeting diverse consumer preferences

Today’s travellers demand more payment flexibility, as our own recent research clearly indicates. When respondents in the UK were asked which payment method they prefer using for booking travel online, debit cards led the way (37% of consumers), with credit cards (32%) right behind, but digital wallets (19%) are also a popular choice. As well as digital wallets, travellers highlighted that they’ve used other alternative payment methods, including bank transfers via open banking products (14%), eCash (8%), or ‘buy now, pay later’ solutions (5%).

However, digital wallets are particularly crucial, and they can even make or break a travel transaction. Research suggests that 10% of consumers under 34 will abandon a booking if digital wallets like Skrill, Neteller, Apple Pay or PayPal are not available.

While many travel bookings occur online, physical storefronts still play a significant role, especially for agencies catering to older demographics or those with complex itineraries. Offering flexible in-person payment options – including point of sale (POS) terminals allowing contactless payments by cards or mobile wallets – helps ensure a consistent and convenient experience across all customer touchpoints.

By providing a range of payment options, including digital wallets and local payment methods popular in the UK like Direct Debit, travel businesses can reduce drop-offs, increase conversion rates, and expand their customer base.

Data-driven growth: Using payments data to build stronger relationships

In the experience economy, data is one of the most powerful tools travel businesses can utilise to boost performance and build stronger relationships with customers. By examining payment data, companies can identify which payment methods generate the highest conversion rates and prioritise them in their online checkouts and in the overall process.

Sharing accurate and transparent data enables acquirers to evaluate actual exposure rather than relying on assumptions. This can lead to better security terms and increased liquidity. Businesses can also leverage customer feedback and behavioural insights to enhance their payment experiences and marketing strategies.

With improved insight into payment performance and customer behaviour, travel companies are better positioned to reduce risk, enhance cash flow, and support long-term growth.

Looking ahead

As consumers continue to pursue more frequent and immersive travel experiences, the importance of payments in influencing customer satisfaction and business growth has never been greater. From enhancing liquidity and reducing friction to providing diverse payment options and leveraging data, travel companies have a clear opportunity to adapt.

Download Paysafe’s 2025 travel payments whitepaper, Fuelling growth in 2025, to understand how travel companies can better meet increasing expectations with more innovative and flexible payment strategies.

Bio

As Vice President of Sales and Partnerships for Travel and E-commerce, Arun Lal leads Paysafe’s travel business globally. Before joining the company, he served in business development roles at Visa for eight years and also worked at the International Airlines Group (IAG). Arun is based in Paysafe’s global headquarters in London, UK.

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