How payments could trigger a resurgence for the travel industry
It’s no secret how the air travel trade has been knocked to its knees by the pandemic. To keep going, airlines have had to find new ways to stimulate growth, and harnessing digital payments for travel purposes could be one of those ways.
Governments worldwide are cautiously trying to implement methods for air travel to resume. In Europe, where summer tourists are a major aspect of local economies, the European Union is rolling out its digital vaccine ID to identify vaccinated travelers and ease travel restrictions. And ‘travel bubble’ initiatives have been tried between several countries, with uneven levels of success.
But streamlining digital payments strategies for travel sector outfits like airlines and rail networks could be just as critical, as payments make up an integral aspect for travel planning. Payment methods have evolved greatly over the years, even more so during the pandemic when consumers preferred contactless payment options even more than before.
Alternative digital options like virtual wallets and ‘Buy Now Pay Later’ (BNPL) have been gaining more and more attention for their ease of use and low barriers for entry – in many cases, users don’t even need a bank account at all.
As planes and other means of consumer travel slowly resume globally, what drives payment choices for travel? Research by Worldpay from FIS illustrates that credit cards is still the dominant way to pay for flights, with slightly more than half of airline ticket purchases being made by card. Beyond that though, the payments landscape for travel becomes a little more fractured.
The Worldpay data indicated that 44% of travelers said they would like to pay for flights in installments, which means the growing popularity of BNPL, such as PayPal’s new ‘Pay in 4’ payments option, could be in the offing for travel arrangements. American Express has already launched a BNPL air travel option for its US customers, and Jetstar airline in Australia has linked up with BNPL fintech Afterpay to provide instalment options for Australian consumers.
A frictionless payment process should not be underestimated. In fact, consumers ranked a smooth payment process as the third most important aspect of their travel booking, almost on par with customer service and booking confirmations. Examples of “friction” in the payment process include a declined payment without explanation, an unexpected site redirect, or the requirement to populate card details at a later date. For airlines, taking steps to make the payment process as streamlined, efficient and frictionless as possible can improve the user experience and help build loyalty.
At least one in four travelers (28%) would drop out at the checkout and book elsewhere if their payment method wasn’t available, according to Worldpay findings. Another 18% indicated that they would reluctantly use a different payment method, but they wouldn’t book with that airline again. So the payments and checkout journey is vital for retaining travel customers, and providing the option to save user details could prove beneficial. 43% of travelers are more likely to book if their personal details are pre-filled on the checkout page, and 40% are more likely to book if they can use payment details saved in their browser.
Speaking of browsers, customers are making travel buys from their mobile devices more than ever, with just under half (46%) of global users still making purchases from their desktop browser. The role of social media in travel decisions has also picked up, with 43% of travelers indicating that they click through via social platforms such as Facebook, Instagram, or YouTube to book a flight these days.
Like hotels and tour companies, airlines and other forms of mass travel have to rebuild trust with customer bases in the aftermath of COVID-19. Having a clear-cut yet diversified payments strategy, ably supported by trust-building options such as offering third-party consumer protection schemes, could help elevate the travel sector and make it a viable option for consumers once again.