Point of sale credit and other innovations are a lift for travel payments

Clearly it's been a difficult year for the travel industry, but there’s reason to believe the travel will again reach great heights by optimizing payment technology and capitalizing on new customer behaviors.

As coronavirus lockdowns begin to lessen and vaccines become available, the travel industry is preparing for when consumers will be ready to travel, deciding what services are most important to offer.

Across the travel industry, from international airlines to OTAs (online travel agents), merchants are looking for technologies that both mitigate negative economic impacts like the pandemic, and strive to meet customer demands in the new era of travel. Many leading merchants like Travix, Air Asia and Accor have found that the best path forward is through the development and implementation of payment technology to power ahead.

Lockdowns around the world severely depressed travel sales across the industry, from flights to hotel bookings. According to research from the Airlines Reporting Corp., air travel had a significant decline in revenue, regardless of payment type. The ARC settled $7.8 billion in air travel sales in August 2019 versus only $751 million in August 2020, showing a difference of $7.1 billion. As consumers opted for travel through other modes of transportation, like buses, trains and cars, domestic and international airline markets nearly shut down.

Due to this enormous disruption, the travel industry also had unprecedented levels of refunds. Major airlines like Emirates and Qatar Airways refunded their customers $1.3 and $1.2 billion, respectively. Monetary refunds like this have placed a significant strain on companies’ cash flow and have led to many introducing vouchers for future flights as a means of compensation, drawing criticism from consumers just looking to get their money back.

Despite the lower volumes of travel and a decrease in ticket sales and bookings, fraud still looms over the travel sector. Airlines continue to give customer refunds for fraudulent travel bookings leading to additional losses, while travel agents add to potential “double dipping” as customers request refunds from airlines and chargebacks on the travel agent side. With the transition to ecommerce, many travel brands have also had to combat fraud through the leaking of customer data.

It’s clear that through the lack of ticket sales, customer refunds requested and instances of fraud, that revitalizing revenue across the board is top priority for the travel sector widely. With the implementation of new payment technologies, airlines can get back on track while still meeting customer demands.

It’s an understatement to say that the COVID-19 pandemic transformed customer behavior and accelerated the adoption of digital channels in all industries. In order to bring the travel industry into the new world, OTAs and airlines can leverage payments technology to make way for the post-COVID rebound. By utilizing new solutions, companies will be able to protect their lost revenues and turn these payments into profit.

Nuvei published a white paper recently with the teams at Edgar, Dunn & Co. and the participation of Visa, including interviews with executives at top travel operators. The white paper details some of the major roadblocks for the industry, before outlining the next best steps for major merchants. One of the first things that merchants can do is include digital-first and touchless travel options in order to reassure customers that they’re not putting themselves in danger by going to the airport or working with staff. Over the past year, there has been a significant rise in the use of in-app payments like Apple Pay and digital wallet use, and like AliPay and WeChat, through the utilization of QR and Paybylink technologies, by travelers internationally.

Additionally, customers are expecting new payment features like payments in installments. With buy now/pay later’s increasing popularity across retail and ecommerce, customers are now expecting to be able to divide the cost of their booking into smaller increments over a fixed period of time. Airlines are also introducing “hold my fare” features, locking in specific costs for a short period for a small fee, and sometimes free of charge. Some find this feature capitalizes on impulse purchases without financial commitment, providing an opportunity for travel merchants to strengthen loyalty for potential customers.

Others are utilizing subscription services to continue and foster strong relationships with travelers to widen their core base. Merchants are also forming relationships with payment partners to establish connections with multiple APMs and acquirers, broadening their network of potential solutions for customers through their active discussions with different card schemes and trade associations. Establishing relationships with flexible payment partners also creates a support net for merchants, as payment partners can identify appropriate volumes and include third parties as necessary.

Finally, another key driver for the travel industry post-COVID is the use of payments data analytics. By creating data reports at the transaction level, merchants will be able to better understand what’s driving customers' decisions, how to improve their experience at checkout and, most important, improve conversion rates. Payment analytics are a crucial asset in navigating potential fraud — helping curb one of the biggest hurdles through and after the pandemic.