Gone are the days where the only place you could book a holiday was at the travel agents – nowadays we are bombarded with heaps of online merchants aiming to offer the best deal. With this digital environment comes friction in terms of how customers want to pay. Evie Rusman analyses the importance of frictionless payments in the travel sector
In 2018, travel and tourism generated $8.8trn and supported 319m jobs globally. Therefore, seamless payment integration is necessary in order to fully benefit from this growing sector.
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Amadeus’ most recent report, Frictionless Travel Payments: From complexity to competitive advantage, highlights that the rise of ecommerce has set new benchmarks for customer convenience when it comes to payments.
Today’s consumers expect to be able to pay via their preferred method of choice, and this in turn has caused difficulty for merchants in regard to the best way to approach this new attitude. Meanwhile, regulations such as SCA in Europe and data privacy laws like GDPR are set to rock the payments boat even further.
Amadeus argues that this friction in travel payments is driving customer abandonment and loss of revenue.
Flexible payment options
According to the report, when paying for travel, 55% of travellers prefer to use a credit card. However, in some countries, local payment options are more popular – in China, mobile apps like AliPay and WeChat dominate the region. It is this change in preference from country to country that poses a challenge for travel merchants.
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By GlobalDataAmadeus advises that retailers should improve their payment choices at the checkout stage. It recommends that retailers audit their payment options regularly and identify the most relevant choices for their target buyers across key markets and different channels.
In addition, by choosing a payment platform that enables merchants to easily add and remove certain payment methods will ensure a more seamless customer experience.
Jean-Christophe Lacour, head of merchant services, Amadeus Payments, says: “More and more of the big players like Spotify, Airbnb and Amazon recognise that payment is important. They now have dedicated teams to look after payments because they understand that it is important customer experience is good for future loyalty.
“If customers have a good experience with a merchant, they will stick with them. If customers have to make an extra effort and it is complicated to add payment details, then they probably won’t go back to that merchant again.”
Instalments
Instalments are also a popular method of payment among millennials and Gen Z consumers. The report states that two in three consumers would be more likely to buy from a travel provider if it allowed them to pay in instalments.
Lacour adds: “Paying by instalments has become a preferred way of life in some markets, China and Brazil in particular. There are lots of different ways of doing instalments – it can be funded by the retailer, it can be funded by the issuer and funded by the customer itself. People like to see the option of paying by instalments at the point of sale.
“Also, by giving people the option to pay in instalments, customers might upgrade or go for a more expensive holiday. So it is becoming more and more prevalent.”
Lacour also advises that travel merchants should only offer instalments to people who are pre-checked and are able to afford it.
Transparency and security
When it comes to online bookings, customers want to be “in the know” before they reach the checkout and avoid any unnecessary surprises. Amadeus outlines that 42% of travellers said transparency of costs would result in a good payment experience.
However, unexpected surcharges are proving to still be a substantial concern for holiday bookers, with 38% saying that lack of clarity about their total spend is the biggest payment pain.
Security is also a major cause for worry when it comes to online bookings – 37% said they feel uncomfortable putting their details on a website. Amadeus advises that merchants ensure compliance with regulations including GDPR and PSD2 and to use solutions such as tokenisation and encryption to protect consumer data.
Bart Tompkins, managing director for payments at Amadeus, says: “I’m confident that 2020 will be the year in which we see travel sellers aligning their payment strategies to meet not only customers’ demands but also their preferences.
“However, with 75% of travel firms still finding it hard to offer a simple and consistent payment experience there’s work required to deliver on travellers’ desire for greater choice, transparency and security.”
Last minute bookings
With merchants such as Lastminute.com, Expedia and booking.com, it has become a normality to book holidays less than two months before travelling. This is especially true for millennials, who are twice as likely to book last minute (60%) as those aged 55 and above (33%).
As a result, there are calls for merchants to modernise online platforms and keep up-to-date with the latest payment technology. According to Amadeus, introducing mobile apps would be an efficient way to encourage spontaneous purchasing.
However, the biggest takeaway from the research is the importance of flexible payment options as this is what really helps to drive sales forward. If customers can pay using their method of choice, then they will most likely book with that merchant again.
Stephan Ropers, president of strategic growth businesses at Amadeus, says: “At Amadeus, we’re on a mission to make travel as frictionless as possible, and as this research makes clear, payments is an area full of opportunities. If we dare to think differently, we can make payments a ‘wow moment’ that helps earn travellers’ trust and loyalty.”
The study was developed based on a global survey of 5,665 travellers in 10 globally representative markets.
