New research reveals 66 percent of global travel companies see their fragile margins eroded by inefficient payment systems
- Airwallex and Skift research finds nearly two-thirds (66 percent) of travel executives believe inefficient payment systems are harming their profits
- 70 percent find cross-border customer payments are more challenging due to new payment methods, despite this activity making up at least a quarter of their revenues
- Upgrading payment technology is a key focus, with 90 percent of executives planning to make it a priority over the next 12 months
New research by payments and financial platform Airwallex and Skift has revealed 66% of travel companies are seeing their profit margins impacted by outdated or complicated payment systems, with nine in 10 expected to prioritise modernising their financial operations this year.
The report found the travel industry is also being challenged by shifting payment preferences since the pandemic.
While revenue from cross-border payments is on the rise, the unprecedented diversity of payment methods in different markets complicates transactions for 70 percent of travel companies.
Skift and Airwallex surveyed 473 travel executives in April 2024 across seven global markets including Australia, China, Hong Kong SAR, Israel, Singapore, the UK, and the US.
The survey respondents confirmed that they make decisions about payment processes and financial operations for a travel company across the sector including online travel bookings, travel operators, tours and activities, and destination management.
It found travel customer payment preferences are shifting with local payment methods being increasingly used.
Credit cards, debit cards and digital wallets remain by far the most common customer payment methods.
However, travellers are increasingly using local payment methods or peer-to-peer payment apps, which can vary widely by market.
88% of travel executives agreed that there has been a shift in how customers prefer to pay since the COVID-19 pandemic.
Local payment methods and peer-to-peer systems are also rapidly gaining popularity, especially in Asia.
It also highlighted handling a variety of payment types, across different markets, is becoming increasingly complex for 70% of travel companies.
The research also suggested cross-border transactions are now commonplace with nearly 40% of travel executives reporting half of their revenues to be from international customer payments.
Meeting different market payment needs, foreign exchange (FX) fees, and managing multiple supplier and vendor payments in numerous countries hinder travel companies’ ability to expand their supplier or vendor network in new markets.
75% of travel companies earn more than one-quarter of their revenue from cross-border payments, while 88 percent of companies frequently make payments to suppliers or vendors in foreign currencies.
67% of executives agreed that cross-border payments have become more complicated due to the volatility of FX rates.
Managing multiple supplier and vendor payments in different countries using existing payment and financial infrastructure and reconciling bookings, payments, commissions and refunds data is a key challenge for more than 50 percent of executives.
Challenges with payment systems, such as multi-currency payments and settlements, fraud risk and other operational inefficiencies are impacting travel companies.
The report found nearly two-thirds of travel finance executives say that outdated or complicated payment systems are directly impacting their organisational efficiency and profit margins, with nine in 10 reporting at least a 2&t erosion and over one-third losing 10 percent
While 90% of travel executives are prioritising upgrades to payment and financial operations systems, 80% of executives would be interested in an all-in-one payment and financial operations platform.
Jack Zhang, co-founder and CEO of Airwallex, said: “As global travel continues to boom, travel companies increasingly rely on quick and seamless cross-border payments to surpass customer expectations at every touchpoint.
“However, our latest study shows that slow and outdated payment processes are increasing the cost of moving money internationally, which is eating into their profits – modest at the best of times.
“Modernising their financial operations with a unified and scalable payment solution will be critical to reducing the cost and friction associated with managing cross-border transactions. For smaller players, this can be what levels the playing field, enabling them to compete with larger, more established counterparts.”
Rafat Ali, CEO and founder of Skift, said: “Our survey of global travel executives uncovered new, unique and even surprising insights into why unified payment and financial systems are critical in meeting today’s traveller expectations.
“Amid an unprecedented rise in international tourism, the report intends to give travel companies a framework to expand their knowledge base and build more efficient, effective and profitable businesses through modernised payment and financial operations systems.”
