Yvonne Szeto, vice president, commercial APAC, Worldpay from FIS explores how the future of travel payment strategies might be shaped for the post-Covid travel industry
The travel industry is moving forward with a renewed sense of optimism and new ways of adapting in a post-pandemic world. The lessons learned over the past two years are still just as relevant as they were at the beginning of the pandemic, and now that airport gates and hotel rooms are nearing capacity again, new approaches are needed.
With a third of consumers expected to travel more this year, the industry needs to cater for travellers’ new expectations, and payments are increasingly being considered as a key driver to fuel growth in the sector.
Adapting to trip stacking
To combat uncertainty, many customers have adopted the tactic we now call “trip stacking”. This entails booking multiple trips, hotel stays or flights over the same period, just in case one or more of them is cancelled. This comes as a rebound in bookings has overwhelmed understaffed airlines, leading to flights being axed.
Travel companies, airlines in particular, are hit hard by trip stacking, as last-minute changes can mean empty seats, wasted resources and frustrated forward planning. Should providers wish to dissuade customers from trip stacking, they could request an initial, non-refundable deposit for travel, followed by an automated, incremental payment to cover the remainder of the cost.
If travellers continue to choose to trip stack, it is likely that they expect to request a refund at some point in the customer journey. As this trend evolves, it is important to ensure online payment processes are simple and allow for automated, frictionless refunds. Offering the experience customers expect can help boost satisfaction and reduce the risk of chargebacks.
Travel now, pay later
Buy Now, Pay Later (BNPL) has been steadily growing in popularity in the past few years, and it is now taking off in the travel vertical. More BNPL payments are arriving within the travel and airline space. For instance, Atome, a popular BNPL provider in Asia, has partnerships with Cathay Pacific as well as digital travel platforms Agoda and Klook. Consumers in Asia are increasingly opting for such services, with regional BNPL players noting they have seen a rise in travel-related transactions.
More and more, consumers are seeking greater control over their spending patterns and finances. Flexible payment options such as BNPL can alleviate some pressures felt by consumers amid inflation and recession fears, as well as minimise the inherent risk of paying for travel in advance. It can also aid operators in filling plane seats and rooms as inflation slows pandemic recovery, while it could also be helpful in making expensive business and first-class seats more affordable for leisure travellers, with a lower up-front payment potentially enticing more passenger upsell. Travel merchants who have yet to tap into this trend should start to consider BNPL strategies.
Benefits of social selling
A fifth of consumers we surveyed last year were expecting to purchase travel, holidays, and experience on social media, up from 14 per cent in the previous year. That makes a strong social selling strategy a must-have for travel companies to integrate into their multi-channel selling solution.
Whenever a new technology or channel starts to grow, one of the primary challenges becomes payment execution. Today, there are two ways to convert social media users into buyers: you can redirect to your e-commerce platform or take payments directly within the social media platform. Either approach needs payments to be straightforward, seamless and simple. In this regard, digital wallets have emerged as the essential social commerce payment method due to the streamlined checkout experience it provides.
Another social selling strategy is livestreams, which allows for instant, seamless purchasing within an immersive social experience. Travel livestream campaigns are growing in popularity, especially in China where the livestreaming trend first took off. A notable example is Trip.com’s hugely successful livestreamed shows hosted by its co-founder James Liang, which sold US$294 million of travel packages and hotel room bookings over 25 livestreams.
As social media-oriented merchant sales strategies continue to become more ubiquitous, payment integration into such platforms will become an important lever to drive adoption of new user journeys.
A new kind of tourism
To differentiate their offerings, travel companies are starting to engage with AR and VR to enable people to interact with the attractions and destinations. For instance, a hospitality group in Singapore has launched a hotel in Decentraland earlier this year. On a much larger scale, South Korea is investing US$187 million into creating its own metaverse ecosystem, with virtual tourism services allowing visitors to explore its top attractions. As one can see, the possibilities are endless in this new frontier.
Payment providers need to enable transacting in the metaverse, and think creatively about how they can embed payment services such that they become virtually invisible. Imagine taking a city tour in the metaverse – visitors will require instant access to a digital wallet that supports on-the-go purchases of souvenirs and stores these digital assets. Ideally, they can use this digital wallet across metaverses.
With travel spend likely to grow over the next year, it is time for airlines and travel brands to adapt to new trends to ensure they are winning vacation spend. As shown by the examples above, it’s all about providing a compelling payment experience that resonates with customer expectations surrounding choice, simplicity and security, and putting payments at the centre of the customer experience can act as a passport to success.