Article

How the travel industry can seize the payments opportunity

  • 03rd November 2023
  • Reading time: 2 min

Things are looking up for the travel industry. The post-pandemic recovery period has been a success, with twice as many people travelling during the first quarter of 2023 than in the same period of 2022. 

But despite an impressive bounce back, some perennial issues remain: in particular customer retention. Typically, customers only have infrequent interactions with travel merchants, as they usually only require travel services once or twice a year. This makes customer loyalty and repeat spend areas of concern for many.  

While there are many ways to drive customer loyalty, an under-explored area is loyalty-boosting payment methods. To make better sense of the payments landscape today, we interviewed 250 travel merchants and 2,500+ online consumers across the UK and Europe. By asking them about their priorities, pain points, and preferences, we uncovered some key insights on everything from buy now, pay later (BNPL) to the importance of taking ownership.  

Data for loyalty 

A great way to build loyalty is by offering personalised experiences. Personalisation can enhance the overall customer experience and foster a deeper connection between the traveller and the travel brand.  

There are many ways to offer personalised experiences. For example, a travel merchant might analyse customer data to understand their preferences, such as preferred destinations and budget. The travel merchant could then use this information to tailor travel recommendations and offers, or even provide personalised itineraries. Ideally, this personalisation might even lead to a “connected trip” – a tech-powered, all-encompassing travel platform that delivers seamless trips for customers.  

However, in order to deliver anything like this, you have to have customer data in the first place – something not all payment methods provide but many of our survey respondents said they want. Indeed, 74% of our travel merchants said they see access to customer payment data and insights as a significant or moderate issue, and 56% of our travel merchant respondents said they want more control over customer relationships and customer data. In this way, they would be able to build loyalty and monetise their customer base beyond core service purchases. 

Responsible payment methods

Elsewhere, our travel merchants expressed concern about unethical and unregulated payment methods, in particular the rise of BNPL. Indeed, 96% of our travel merchants said they’d welcome more BNPL regulation to better protect consumers. This concern is not unwarranted. BNPL providers don’t always carry out affordability checks. As a result, BNPL users can’t always repay what they’ve borrowed.  

On top of this, BNPL providers frequently require merchants to give up control of the payments experience. This is because, when it comes to BNPL, the payment relationship is between your customer and their lender, not between the customer and the travel merchant – something that can damage customer loyalty efforts. Notably, 76% of our travel merchants were concerned that BNPL elevates the lender’s brand rather than their own.

Free and fair payments 

The payments landscape might be a complex place, but loyalty-boosting payment methods are possible. To find out more about how travellers feel about payment methods, and what other merchants are doing, take a look at our report, Freedom and fairness: Owning the consumer payments experience.

Download the report

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