Bartek van de Pavert, Director of Business Development Travel at Payplug, shares with The Paypers the payment trends in the tourism sector and how businesses can turn payment into a revenue driver.
The upheaved context of the last few years has had a particular impact on the travel sector. Between the lockdown period and the spectacular recovery that followed, businesses in the sector have had to continually adapt to meet consumer expectations, particularly in terms of payment.
Indeed, according to the UNWTO world tourism Barometer, international tourist arrivals to Europe have increased by 172% between the period January-July 2021 and January-July 20221. Despite this, travelling has never been as expensive as it is today. Declining purchasing power is squeezing consumers' travel budgets and driving them to look for ways to facilitate their payments and manage costs. This is why BNPL (Buy Now Pay Later) payment solutions are increasingly popular. According to the Barometer conducted by Harris Interactive for Oney in 2022, 28% of customers in the tourism sector are considering using split payments2. If we look at this trend from a geographical perspective, BNPL has been used in France for many years, even before the acronym ‘BNPL’ became popular. For Misterfly, one of the travel merchants we work with, the share of BNPL payments in travel purchases can even reach 60%. In the US and UK, BNPL is already well established, and most major travel suppliers and airlines offer this payment option to their customers. It is therefore in the interest of travel professionals to offer a BNPL payment solution to increase their average basket and optimise their conversion.
Moreover, the tourism market has been marked by a strong digitalisation of customer paths to overcome the problems generated by lockdowns: 81% of French consumers perceive the tourism sector as advanced in terms of the digitalisation of services3.
This trend is now anchored in consumer habits and companies in the sector must therefore offer impeccable online customer journeys to remain competitive. Capitalising on the payment experience becomes an opportunity for merchants to optimise their performance by offering differentiated payment methods, such as QR codes, digital wallets, and Pay-by-Link.
Finally, as the travel sector is above all cross-border business, offering multi-currency payments is becoming essential to reassure consumers and facilitate their purchasing decision. Indeed, 76% of customers say they prefer paying in their local currency (PayPal study, 2018)4.
Payment orchestration is making increasing sense as travel sales shift to digital channels. It allows for a centralised location to manage several acquirer connections and all other payment methods.
The travel sector is inherently international: merchants often operate in multiple countries, and many have a multi-PSP strategy to mitigate risk but, more importantly, to benefit from each other's strengths. From the availability of certain payment methods and currencies to local acceptance performance, no single PSP or acquirer can provide the best solution for every purpose and every geography. In this sense, Payment Orchestration Platforms (POPs) can dynamically route the flow through the implementation of routing rules designed to continuously provide the best-performing payment flow route.
Additionally, POPs offer other advantages to travel companies: They also allow them to reduce their costs by favouring local payment methods or acquirers to take advantage of the best commercial conditions. In addition, payment orchestration platforms offer a unified view of all payments. This simplifies management for the payment and ecommerce teams of a large travel agency or airline, for example.
Payment orchestration is, therefore, a significant asset in an international and digitalised context that will allow tourism companies to continuously optimise their payment path and to increase their acceptance rate and therefore their conversion.
Today, it is essential to see payment as a revenue driver and not as a cost centre. Payment is a conversion lever for travel businesses at every stage of the transaction:
Checkout:
To meet payment habits and thus avoid shopping cart abandonment, which is a source of lost turnover for travel businesses, Payplug* offers payment methods adapted to a wide variety of uses: split payment, deferred payment, holiday vouchers, AMEX, … Thanks to a variety of options, payment is becoming a growth tool for travel companies.
Authentication:
PSD2 has generalised the obligation of strong authentication for European payments, which creates a challenge for optimising frictionless payment. Since airline ticket prices often exceed the threshold for TRA (Transaction Risk Analysis), most transactions cannot be exempted from strong authentication. However, for smaller baskets and insofar as the company respects the fraud rates defined by the RTS, TRA becomes an asset for generating frictionless payments and thus increasing the acceptance and conversion rate.
Authorisation:
Because of its direct link with Groupe BPCE, the second-largest French banking group, Payplug has privileged access to the payment data of its cardholder customers. From this advantage, a unique connection protocol called FastPass allows Payplug* to obtain up to 98 % frictionless requests accepted5 linked to these cards. This is a real advantage for travel companies who make the European market one of their priorities because France is the leading card payment market in the eurozone (ECB Payments Statistics - July 2022)6 and because Payplug* obviously supports merchants in their payment strategy at the European level. They can improve their payment performance by increasing their acceptance rate in France but also in other countries.
Technology:
Travel is an industry that may seem seasonal on a national scale but is continuously present around the world. To meet this constant flow, businesses in the sector need to be able to rely on robust and efficient payment technology. Over the last months, we have proved our platform's robustness and the ability to process an increasing number of transactions per second (TPS): up to 250 TPS7.
In conclusion, due to the inflationary and international context, travel companies should rethink their payment strategies according to consumers' local expectations and uses. The objective is to optimise conversion throughout the payment process.
To find out more about payment performance levers in the tourism sector, please read our white paper.
1. UNWTO World Tourism Barometer and Statistical Annex, September 2022
2. Barometer conducted by Harris Interactive for Oney. Online survey from March 9 to 14, 2022, in France, Spain and Portugal
3. E-commerce 2022: évolutions et attentes des Français - OpinionWay x Payplug Enterprise, September 2021
4. PayPal Cross-Border Consumer Research 2018
5. Payplug data
6. ECB Payments Statistics - July 2022
7. Payplug data - 2023
* The Payplug brand brings together the entities of Payplug and Payplug Enterprise
About Bartek van de Pavert
Bartek van de Pavert, Director of Business Development Travel at Payplug, has been a payment expert in the travel industry for 15 years. He has an in-depth knowledge of the e-commerce value chain, the omnichannel travel merchant ecosystem, and commercial transactions.
About Payplug
Payplug* is the French payment solution designed for merchants, e-merchants of all sizes, and fintechs. Our mission is to redefine payment performance to help the most demanding players in the market realise their business ambitions faster in France and Europe.
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