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The Future of Travel Payments: Embracing Modern Payment Solutions
The travel industry is vibrant and ever-changing, thriving on seamless experiences from booking a trip to boarding a flight. It is a dynamic sector worth over $9 trillion, according to the World Travel and Tourism Council, with payment processing accounting for a significant portion of transactions.
At the heart of this smooth journey are efficient payment processes. As payment methods rapidly evolve, travel businesses must stay agile and adaptable to maintain their competitive edge.
In this article, we'll share the key payment trends shaping the travel industry today, from alternative payment methods to subscription services.
The Rise of Buy Now, Pay Later (BNPL)
Buy Now, Pay Later (BNPL) options have revolutionised the payment landscape in many sectors, and travel is no exception. BNPL schemes appeal to travelers by offering financial flexibility, enabling them to book trips without immediate full payment. This flexibility can significantly boost booking conversions as it lowers the financial barrier to entry for many consumers.
Benefits and Challenges of BNPL
The primary benefit of BNPL for travellers is the ability to spread the cost of their trips over several installments, making travel more accessible. BNPL can increase sales and higher average booking values for travel businesses. However, challenges include managing non-payment risks and ensuring compliance with financial regulations.
Consumers are increasingly preferring flexible payment options. Travellers are more likely to book when offered payment flexibility, making BNPL an essential tool for travel businesses aiming to enhance customer satisfaction and increase bookings.
Subscription Services - a new boost for consumers
Subscription services are also growing in the travel industry, boosted by the coronavirus (COVID-19) pandemic, as businesses have started considering subscriptions as an option to secure recurring revenue streams.
A recent separate study showed that 36% of global respondents were open to hotel subscription memberships, with 16% already having one. The primary motivators for subscribers paying for travel subscriptions were hotel and flight discounts and cashback rewards.
Here are some of the main benefits subscription services offer for both businesses and consumers:
Benefits for Travel Businesses:
- Provides a steady and predictable revenue stream.
- Fosters customer loyalty and long-term engagement.
- Predictable revenue stream: consistent monthly income.
- Provides valuable insights into customer preferences.
- Ability to offer additional products and services to subscribers.
Benefits for Consumers:
- Offers cost savings on travel expenses.
- Access to exclusive deals and tailored travel experiences.
- Simplified booking process and personalised recommendations.
- Guaranteed availability or price protection for travel services.
Examples of subscription services in the travel industry
Relevant examples of subscription perks in travel include chain hotel programmes and airline membership clubs, offering priority boarding, additional luggage allowance, and exclusive lounge access.
For instance, some of the world’s largest hotel chains provide members with priority booking, room upgrades, late check-out, and free Wi-Fi. Their programmes often include access to exclusive events and experiences, creating a sense of community and added value for frequent travellers.
Similarly, airline membership clubs offer a range of perks, including priority boarding, which allows members to board the plane before general passengers, ensuring ample overhead-bin space for their carry-on luggage. Their members also enjoy additional luggage allowances, which can save significant costs for those travelling with multiple bags or heavy equipment. Exclusive lounge access is another highly coveted benefit, providing a comfortable and quiet space to relax, enjoy complimentary food and beverages, and even catch up on work with high-speed internet before a flight.
Pay by Bank
Pay by Bank is an innovative payment method that allows travellers to pay directly from their bank accounts without needing cards. This method offers several advantages over traditional payment methods, including enhanced security and lower transaction fees.
Consumer trust in Pay by Bank is growing, with many appreciating the added security and simplicity. 2024 Insights show a positive reception towards bank-based payments, especially among tech-savvy travellers who value efficient and secure transaction methods. It is placed in the top three payment methods in the UK, Netherlands, Finland, Spain, and Germany, with one-third of those aged 18-29 using it daily or weekly.
For travellers, Pay by Bank provides a secure and straightforward payment process. It reduces the risk of fraud as there is no need to share card details, and payments are authenticated directly through the bank. This method also offers convenience, as transactions can be completed quickly and easily.
SoftPOS: Transforming Mobile Devices into Payment Terminals
SoftPOS technology, which transforms mobile devices into payment terminals, is another groundbreaking development in the travel industry. This innovation offers significant benefits, including increased flexibility and cost savings for travel businesses.
SoftPOS allows travel companies to accept payments anywhere , enhancing the customer experience and operational efficiency. This technology can be particularly advantageous for small travel agencies and independent operators, reducing the need for expensive hardware.
The Future of Travel Payments: A Look Ahead
Emerging technologies such as cryptocurrency and biometrics can potentially transform travel payments further. Cryptocurrencies offer a decentralised and secure method of payment that could appeal to a growing segment of tech-savvy travellers. Biometrics, conversely, promises to enhance security and streamline the payment process through features such as facial recognition and fingerprint scanning.
The future of travel payments is poised to be shaped by continuous innovation and adaptation. As payment technologies evolve, so will the opportunities for travel businesses to improve their services and customer experiences. To stay ahead, businesses should remain agile, embrace new payment trends, and prioritise secure and convenient payment solutions.
Speak to Trust Payments at ABTA’s Travel Convention in October for more insights and updates on the latest trends in the travel industry, or find out more here.