How technology is changing travel: Fintech innovation and alternative payment methods are on the rise

Technology has transformed how people travel. Innovations in search have inspired people, connectivity has eased online booking and personalization is offering better experiences. These developments, however, have overshadowed the role payments played in the digital travel ecosystem. That has begun to change.

In this blog, we take a look at some of the influences that are driving the trends in payments in the travel industry and what travelers, travel retailers and fintech organizations are looking out for to not only survive but thrive in 2020.

Travelers have been exposed to the simple and seamless payments experience offered by e-commerce and digital service players like Amazon and Uber. These companies allow users to pay from anywhere, anytime virtually and have their product or service delivered to their doorstep. Why should it be any different while travelers are making online bookings?

With the growth of on-the-go destination-driven purchases and the focus on in-destination support, the travel industry is ripe for payments innovation. Global Fintech innovation is happening at a rapid pace and there are now more than 300 ways to pay across the world. The Fintech sector is helping the ecosystem integrate evermore payment methods, comply with daunting new regulations and fight fraud.

According to The Travel Payments Guide (a report for which we joined forces with PPRO, one of the fastest-growing Fintech businesses in Europe, to provide an overview of the global travel payment landscape), travelers now choose to pay for digital travel with alternative methods such as e-wallets and PayPal, more often than cards and cash combined. These alternative methods of payment account for 51% of global travel e-commerce spend.

A statista report says that as of 2019, more than 40% of all travel is booked wholly online and our research with PYMNTS in theTravel Payments Study found the direct and in-direct cost of payments averages 5.4% of travel industry revenues. There is now a once in a generation opportunity to use new technology to bring this cost down through a single, centralized platform that helps global travel players to understand the cost of payments, whilst being able to ‘point and click’ in order to swap different payment services in and out across their complex web of global markets.

The Travel Payments Guide also revealed that some of the largest markets in the world are seeing alternative payments take more than 7% market share in a single year. Travel players and hotels will have to move quickly to adopt technologies that help them easily accept the widest range of alternative, local payment methods such as real-time bank transfers, e-wallets, direct debits and digital payments.

Since the travel industry is built on close and collaborative partnerships, innovation in payments can be a strategic enabler of greater collaboration. Our own work with Worldpay eases friction, helping travelers pay for ancillary services such as excess baggage at the airport and serves as a case in point, by combining Worldpay’s global acquiring reach with Amadeus’ extensive presence at airports we are tackling one of the biggest points of friction.

Next year, we expect the travel industry to double down on its ambitions to offer a smooth and friction-free payment experience by ensuring travelers can pay in the way they choose throughout the journey. This is particularly important when you consider the average traveler now uses four different methods across the entire trip. We also predict a continued uptick in adoption of virtual payments particularly in terms of how travel sellers pay suppliers like airlines and hotels.

Click hereto know more about how technology is changing travel and Amadeus’ travel trends for 2020.