Mike Parkinson has 14 years of Financial Service Industry experience with a focus on International payments in both the online and physical world. He has advised a number of the largest businesses across the globe on their ecommerce and payments strategy.
With Worldpay (opens in new tab) predicting over half of all global online transactions will be made with an alternative payment method (APM) by 2021 – and with bank transfers tipped to be the second most popular APM – travel vendors now have more of an incentive than ever to change their practices in order to offer their customers more powerful payments choices.
This revolution brings a range of new B2C challenges to vendors and forces them into offering more bespoke payment services populated by market-relevant APMs. However, like any move designed to change consumer behaviour, it’s not as simple for travel vendors as “build it and they will come”.
The trick for vendors is to successfully balance a great user experience while educating customers about the different available payment options as they make a purchase. Without either a choice at the checkout or smooth customer experience, vendors are likely to be left behind by competitors that embrace and cater for the variety of customer payment preferences.
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Payments in the travel industry
Worldpay’s Global Payments Report (opens in new tab) highlights the opportunities and challenges facing travel vendors. While it’s vital to offer consumers a number of payment options over traditional card purchases, vendors can best set themselves up for success by offering bespoke options for their customers dependent on behaviours and location. Taking a closer look at how consumers are paying for travel right now makes clear that there’s still no single payment method to rule them all. Therefore, travel vendors must cater to a wide audience to keep customers coming back.
In reality, payments preferences differ dramatically across the world, as organisations such as KLM Royal Dutch Airlines are aware of: “The way people pay is ingrained in their culture and you have to tap into that to make a difference,” says Maarten Rooijers, senior customer payments manager at KLM. The Dutch airline operates online in 85 countries around the world, and has developed a localised payments mix in every single market. “It is not about offering as many payment options as possible – it is about offering the relevant options per market,” says Rooijers.
Rooijers’ advice is especially salient when we compare it with the three key takeaways in Trustly’s recent travel insights paper, The New Way to Pay (opens in new tab):
Localise payment options
The World Bank Group (opens in new tab) estimate levels of credit card ownership to be roughly 65% in the USA and UK. Yet in Sweden and France, the figure hovers around the 40% region. The travel industry needs to find a balance between serving customers’ local payment preferences and educating them about innovative real-time options.
Adapt for local economic and financial realities
According to Worldpay (opens in new tab), around 80% of individuals based in UK and Sweden own smartphones and pay for bills and purchases online. In India, 29% of individuals own smartphones and just 4% pay for bills and purchases online. The travel industry can’t ignore the economic realities of some of the world’s largest markets, where digital adoption is playing catch-up.
Better understand consumers’ incentives to make payments
Australian consumers favour travel-related benefits, US consumers prioritise simplicity, and Chinese consumers stick with what feels most familiar. While global payment trends are clear, the travel industry must never ignore local habits.
The importance of understanding and acting on these key takeaways becomes even more important for travel vendors in light of these statistics:
- 27% of modern travellers have downloaded a travel app to book flights or accommodation, according to Travelport (opens in new tab)
- 74% prefer to book using a digital device, according to We Are Marketing (opens in new tab)
- 36% are frustrated if they can’t use their preferred payment method, according to ACI Worldwide (opens in new tab)
- 66% are frustrated by unclear pricing, according to ACI Worldwide (opens in new tab)
Age also plays a role
It’s not just where your customers are based that shapes their payment preferences – when they were born also plays a role. Worldpay’s latest Global Payments Report (opens in new tab) reveals millennials in emerging markets such as Mexico and China are more likely to shop online than their counterparts in the US and UK. The same research found that 28% of millennials have used a mobile wallet at the point of purchase, compared to a global average of 20%.
Further, research from Trustly’s Ecommerce report, Rethink Your Refunds, Perfect Your Payments (opens in new tab), confirms that choice at the checkout is crucial for purchase success. The report found that 77% of customers agree that the payment methods available to them at the checkout affects their decision to shop with an online retailer. In fact, 66% of consumers want more payment choices when shopping online.
Mike Parkinson, General Manager and Director of Travel at Trustly UK (opens in new tab)
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