By Bart Tompkins, Managing Director, Payments, Amadeus
With the growth of on-the-go destination driven purchases and the focus on in-destination support, the travel industry is ripe for payment innovation. In fact, as of 2019, more than 40% of all travel is booked wholly online. Global fintech innovation is happening at a rapid pace and there are now more than 300 different ways to pay for travel across the world.
By embracing new platforms and technologies, travel companies can now easily accept the widest range of alternative payment methods, helping to improve the customer experience and reduce costs.
So, as we head into a new decade, what can we expect from the travel and payments industry?
Opportunities and challenges
There is immense opportunity for those who can offer the most seamless experience to customers looking to access services digitally. Key innovations from the last few years have ranged from contactless payments and digital crypto currencies to instant payments online, with plenty more to come. For the travel industry, allowing customers to pay in their preferred currency with a frictionless service will ultimately maximise sales and ensure online travel shoppers keep coming back. In our latest payments research, we found that 57% of customers would choose to switch from their regular travel providers if they were unable to use their prefer payment method.
However, changing consumer behaviors and a tricky regulatory environment present hurdles to businesses who are looking to innovate and grow. Recently enforced EU regulations, including Strong Customer Authentication (SCA) aim to tighten payment security online, meaning that providers need to be on top of their game when it comes to protecting customers. The travel industry is at a crossroads when it comes to payments innovation, and the next decade provides a great opportunity to improve the customer experience and manage costs.
A connected economy
Payments will power a major shift to a connected ecosystem which will enable transactions across channels, devices and environments. Currently 5.4% of global travel sales goes towards paying third-party payment service providers, however this is expected to change as the global travel industry takes bigger steps into its own payment revolution.
As we head into the new decade, just about every device will have the capability to enable a transaction and with increased internet access around the world, consumers will have an even greater expectation to move cash to digital payment methods. Research finds that today’s travelers already choose alternative ways to pay for travel, such as e-Wallets and PayPal, more often than cards and cash combined.
Simplicity and improved experiences
The biggest payment trend for 2020 that we can expect to see is simplicity and improved customer services. As we enter a new era in payments, customer experience and enhancement of the customer journey will be the real competitive differentiator. The companies that will take the lead will be the ones who can offer effective one-stop services. Fundamentally, a payment is not just a transaction, it’s an experience. And it’s important to get it right. Frustration with online checkout processes is estimated to cost retailers in the US alone $200 billion a year.
However, it is important to note that successful payments technology and fintech innovation does not just have to be about the travel transaction. In 2018, Singapore Airlines launched its first digital wallet, Krispay, and turned its frequent flyer miles (KrisFlyer) into credit that can be spent with 38 merchants across Singapore. These merchants include retailers, restaurants and petrol stations.
Fundamentally, the payments and travel industry are very much intertwined. Both full of innovation, and developing at a rapid pace, they offer endless opportunities for businesses and the customers that they serve. In the 2020s, the most successful brands will be the ones who understand their audience’s needs – and with so much choice out there, travel brands will need to be smarter than ever on how they target travellers with unique and innovative payment offers.