• Gabriel Le Roux, CEO at Primer


• 30.10.2023 09:45 am
#payments

In an era of a borderless consumer, modern travellers are actively redefining the way businesses and people think about payments. The days of withdrawing local currency and collecting spare change for tips is no longer the standard. 

Today, travellers are embracing a digital-first mindset, where their smartphones serve as financial tools for frictionless transactions. Recent research echoes this, revealing that 77% of UK consumers hopped aboard the mobile payment train in 2022.

It’s not just a temporary trend. The pandemic played its part, increasing flexibility for seamless digital payment experience when travelling. And it’s not just about dining out or visiting attractions. It’s about every step of the journey, from planning and booking to accessing all those microservices along the way.

The rise of a borderless consumer provides a golden ticket for the travel sector to grow. Now, the ball is in the court of tourism and travel providers to capitalise on this opportunity.

The promising future of the travel industry

Fast forward to 2033, the travel industry is expected to be valued at $15.5 trillion, a 50% increase from $10 trillion valuation in 2019. Online Travel Agencies (OTAs) have played a big part in this growth, now responsible for about 40% of all global bookings. Take the UK's largest OTA, On the Beach, for example — they've gone from serving 639,000 passengers to 1.65 million in just six years.

The key in taking advantage of this lies in meeting the needs of a diverse customer base. This means offering secure and hassle-free payments, regardless of where your customers are based. Achieving this involves managing a wide variety of currencies and offering preferred digital payment methods in each market – from traditional credit cards, Buy Now Pay Later (BNPL) services to digital wallets.

The balancing act 

OTAs are fast becoming one-stop-shops for travellers' booking requirements, presenting new challenges in managing a complex payments ecosystem involving multiple stakeholders. While user experience remains important, strengthening the backend infrastructure is equally crucial to meet the demands of modern travellers.

According to IBM, travel is the second most targeted industry for cybercriminals, impacting both company profits and customer trust. It’s, therefore, no surprise that fraud protection methods like two-factor authentication, 3D secure verification and network tokens have now become a standard practice. 

To effectively meet the operational needs of the travel industry, cost optimisation and reduction is key. Imagine OTAs juggling multiple markets and payment providers – adopting a unified payments infrastructure, enabling to enhance conversion rates, offset additional expenses, and ensure competitive pricing, is a game-changer.

We also can’t forget the increased demand for innovation in a post-pandemic world. Flexible options like Reserve Now, Pay Later (RNPL), shorter cancellation windows, and one-click checkouts should be on everyone’s radar. Doing so will help travel businesses to thrive and remain responsive to changing market demands.

In a time where digital payments are becoming the norm, it's important for the travel industry players to lead the way with a scalable payments stack that anticipates the demands of the borderless consumer. Payments is no longer just a cost centre, it's fast becoming a strategic function and a revenue driver for businesses.