As the summer season heats up, so does the travel industry, with millions of people planning holidays and adventures. However, recent IT outages that led to widespread flight cancellations and booking disruptions have underscored the industry’s vulnerabilities. These challenges highlight the need for resilient systems, including the adoption of diverse and secure alternative payment methods (APMs) – to enhance customer experience and ensure smoother operations during peak travel periods.
Historically, the travel industry has relied heavily on traditional payment methods such as credit cards and bank transfers. While these options are widely accepted, they don’t always cater to the diverse needs of today’s global travellers, potentially limiting customer choice and satisfaction. It’s critical that the travel industry finds ways to attract and retain more customers for businesses to improve revenue this year.
By offering a range of alternative payment methods (APMs), travel firms can do just that. The capabilities offered by APMs can help companies streamline the payment journey, which enhances the overall customer experience and therefore can generate customer loyalty and drive sales.
The need for APMs is sky high
A staggering 66% of businesses in the travel sector are losing up to 10% in revenue due to payment inefficiencies, according to emerchantpay research. Common inefficiencies include slow transactions, weak security measures and requiring customers to input lengthy card details. All of these issues can lead to a poor customer experience and, ultimately, checkout abandonment. In fact, more than half of consumers (54%) will not return to a brand after just one bad experience.
Other factors, such as shifts in payment preferences, are also increasing demand for APMs in the travel industry. For example, the youngergeneration of consumers are less likely to favour traditional credit cards when booking travel, having grown up in a digital age. With the advent of digital wallets and other APMs, there is a growing demand for more flexible and secure payment options.
These methods not only provide convenience but also enhance the overall customer experience (CX) by offering travellers the freedom to pay in ways they find most convenient and familiar. Additionally, it’s important that businesses that operate across multiple countries, such as airlines,can accept the preferred local payment methods across key markets.
What new solutions are available?
There are a range of APMs, which are increasing in popularity across the travel sector. For example, 54% of payment professionals in the travel industry acknowledge Open Banking as an up-and-coming payment solution. In simple terms, Open Banking payments enable direct bank-to-bank transfers.
For consumers, Open Banking provides a streamlined checkout experience, with online checkout typically completed in seconds. These account-to-account transactions typically happen in real-time, with funds immediately leaving the customer’s account. This allows for better budgeting and expense tracking for consumers – especially important when booking and saving for high value purchases like holidays. Fraud risks are also significantly reduced with Open Banking due to direct bank connections and strong authentication measures.
For travel merchants, Open Banking solutions can help them optimise payment processing fees, reduce risk of chargebacks and improve the payment journey. Furthermore, as there is no manual entry of payment details, conversion rates could also see an uptick thanks to Open Banking.
Other emerging APMs in the travel sector include digital wallets and instalment payments. Integration of all these solutions can be facilitated by partnering with a trusted payment service provider (PSP). In fact, for 32% of payments leaders, the ability to offer a range of global payments options is the key reason for seeking a PSP.
Final thoughts
42% of travel merchants admit that improving their payments pages could reduce checkout friction and optimise payments performance; it’s clear that change needs to happen.
Travel organisations must assess and improve their current payment offerings and implement new, digital payment options. Successfully doing this will not only enhance the customer experience, but also address revenue challenges and provide a competitive edge. In this rapidly evolving market, adopting APMs is not merely a convenience; it’s a strategic imperative for future growth and resilience.