The travel industry historically struggles with emerging trends and technologies, and payments is no different. Throughout the globe, local payment methods provide competition and complexity for travel suppliers and intermediaries according to Phocuswright’s latest report on the topic The State of Global Travel Payments. These local solutions help promote more payment options and capabilities for consumers, but are usually targeted to residents of that country or region.
Changes in payment are not happening in isolation. As distribution and payment trends are interconnected, suppliers and intermediaries use payment to drive greater loyalty and ease of use. Different industry players approach the new payments landscape in their own ways:
- Airlines’ focus on reshaping distribution through NDC includes changing the payment landscape.
- The hotel industry suffers from fragmented processes and legacy technologies that prohibit rapid adoption of new payment methods.
- OTAs are leading the payment revolution by embracing the merchant model and offering multiple FOPs to customers.
- Traditional travel agents lack the ability to rapidly react to payment changes in the market.
The travel industry must embrace emerging payment trends despite the clear lag in adoption of these new payment methods. B2B survey results illustrate an industry with payment pain points and a clear resistance to emerging payment trends. These two factors will eventually come to the surface, creating further opportunities for innovative global payment solutions.
Some changes are being embraced as in the case with BNPL and VCCs, which are becoming the de facto payment choices for B2B travel transactions. Meanwhile, the higher fee credit card-based infrastructure continues to dominate.
Key areas of focus for the future include:
- Cross-border payments continue to be a challenge for the travel industry, with high transaction costs, lengthy processing times and complex regulations. Companies offering a low-cost solution for cross-border payments will be well positioned for success in the evolving global payments marketplace.
- Mobile payments are being adopted worldwide and the travel industry views them as important for the future. They could evolve from a standard FOP (e.g., a digital way to store credit cards) to become software wallets that store value and represent tickets and reservations digitally.
- AI has the potential to further transform the global payments industry by enhancing payment orchestration, preventing fraud and automating chargebacks.
The message is clear: The travel industry lags on payment trends. What is needed today is a major push to educate industry players on alternative payment methods and trends to lower costs, improve the customer experience and reduce the settlement cycle. Phocuswright is hopeful that this analysis can spark a dialogue among key industry stakeholders to promote emerging trends and address some of the inherent problems in the global travel industry payments landscape.
This introduction is just the tip of the iceberg. Phocuswright’s report The State of Global Travel Payments dives deep into the following topics, giving travel executives an unprecedented analysis of the entire payment ecosystem in travel:
- Impact of AI on payments
- Key takeaways
- Costs of payment
- Fraud
- Settlement cycles
- Shifts in distribution
- B2B developments
- Virtual credit cards
- Corporate travel payments
- Technology provider perspective
- Trends in global payments
- Real time payments
- Open banking
- BNPL
- Embedded payments
- Digital currencies and CBDCs
- Mobile wallets and superapps
- Cross-border payments
Phocuswright is the travel industry’s leading driver of great decisions.
Make confident, data-driven decisions that outpace your competition by leveraging our in-depth insights and analysis. We offer subscriptions, individual reports, custom research and multi-client special projects to make confident, data-driven decisions that outpace your competition.
Learn more about Phocuswright research offerings here.
