How fintech innovation is solving common travel and hospitality pain points

Over the past few years, technology has made a noticeable impact on the travel and hospitality sectors, improving efficiency, reducing costs and providing enhanced customer experiences. Today, as fintech solutions evolve at a rapid pace, the travel and hospitality industry is beginning to further modernize, exploring new ways to handle online payments as it recovers from COVID-19.

The industry’s introduction of new payment technologies could not have come at a better time. According to recent market research by ECOMMPAY, almost a quarter of UK consumers believe that travel companies can offer better or improved payment services, including more options for paying a deposit or requesting a refund. The hospitality sector closely follows this figure, with 17% of survey participants seeing room for improvement when it comes to payment services.

Let’s examine some of the perceived problems and how fintech solutions can fix them.

Poor website security increases fraud and destroys conversion

39% of consumers have experienced problems in the payment process when booking a travel experience or a hotel stay. Doubts about the security of payment sites and payment processing were the most common problems. While you could argue that this doubt is more perception than reality, the statistics actually support consumer concerns: 45% of respondents to this Statista survey reported a significant increase in the risk of online fraud since the start of the COVID-19 pandemic.

So how can fintech help reduce fraud?

First and foremost, businesses should always choose a payment provider that can achieve the required levels of security and efficiency on their payment pages and during payment processing. If possible, it is preferable to choose a company that offers its own internal anti-fraud systems, since they are always more flexible, with customizable settings and filters that not only massively reduce fraudulent transactions, but do so without destroying checkout conversion rates .

Another layer of defense offered by modern payment providers is 3-D Secure, a protocol used to authenticate cardholder identities. 3-D Secure is designed to allow users to authenticate their identity via a PIN, password or banking app to prevent payment fraud and reduce chargebacks.

Fraud prevention can be a complex topic, but travel and hospitality businesses can successfully overcome any related challenges by working with a payment provider that uses proven technology, artificial intelligence and human expertise to score incoming transactions to identify the common characteristics and the patterns of fraudsters.

Perception is everything – especially when it comes to payment sites

Although consumers are often right to perceive certain payment sites as a security risk, many legitimate websites suffer from cart abandonment simply because their payment sites are perceived as untrustworthy. A 2021 study by the Baymard Institute revealed that 17% of online shoppers abandoned their shopping carts because they didn’t trust the site to handle their credit card information.

So what can fintech platforms offer the travel industry to improve the perception of their payment sites?

In addition to reducing cart abandonment, fintech platforms can help create a frictionless shopping experience with a greater variety of payment methods. Ultimately, this improves conversion across the board and is something that all merchants can benefit from.

Lack of payment options and flexibility at checkout

Over a third (35%) of UK consumers have needed to split payments for a travel experience, with 17% agreeing that it would be easier to split the costs at the time of booking, rather than arranging bank transfers between the travel group.

Additionally, according to ECOMMPAY business and end-user surveys conducted in 2021, approximately 25% of end-users would be prepared to leave a payment page if their preferred payment method was not listed. The high motivation to purchase travel experiences often means that the absence of a preferred payment method will not necessarily result in a cancellation. But with 80% of consumers ranking ease of payment and efficiency as defining factors for a strong customer experience, it pays to offer travelers as many popular and convenient payment methods as possible.

Fintech solutions offer a greater variety of payment options

In addition to offering all the convenient modern payment methods consumers prefer (and expect) in 2022, such as Apple Pay and Google Pay, fintech payment platforms enable travel and tourism businesses to integrate some interesting and increasingly popular alternative payment methods.

• Pay with link: Although not a payment method as such, payment links act as one-time digital invoices containing order data and payment details. Links can be sent via email, messenger or other methods, and upon receipt, customers can pay using their preferred method. Payment links allow the cost of a travel booking to be easily shared between a group of people, while 3DS technology helps reduce the chance of chargebacks.

• Buy now, pay later: BNPL plans are actually a point-of-sale loan, allowing customers to pay in several smaller interest-free installments without lengthy credit checks. 46% of participants in the travel and aviation industry believed that their customers needed more options and flexibility with BNPL models, so it is no surprise to see an increase in interest in this payment method in the travel sector – although of course suppliers are responsible for informing and educating customers about the financial risk of BNPL schemes.

• Cryptocurrencies: While we are far from seeing cryptocurrency payment options at regular travel agencies, advanced services such as private aviation operators are increasingly offering digital currency payment options for high ticket bookings. In ECOMMPAY’s survey, 34% of the businesses interviewed identified the growing demand for crypto payment options as a challenge, so momentum is definitely building for popular currencies like Bitcoin.

A word about Open Banking and its benefits

Open Banking is a relatively new payments technology that provides access to consumer banking, transactional and other financial data from hundreds of major consumer and commercial banks across the EU and UK. The ecosystem allows instant account-to-account payments, easy verification and easy access.

Open Banking offers many benefits for travel operators, including lower transaction costs. Because providers initiate bank transfers on behalf of the end user, the risk of chargebacks is also eliminated. For consumers, the benefits include faster, more user-friendly payment experiences and increased security.

Ends

The changing expectations of end users at a time when the travel industry is recovering from unprecedented restrictions means that operators and agencies need to understand the importance of adopting the latest fintech solutions. With the help of a trusted payment partner, travel and hospitality businesses have a unique opportunity to use the most effective fintech solutions to minimize cart abandonment, improve conversion and provide a frictionless payment experience.

About Katherine Soltane

Katherine is Senior Client Account Manager at ECOMMPAY. She is a dynamic, creative and versatile professional who helps to strengthen payment conversion and increase revenue for some of the most exciting corporate partners.

Katherine strives to be a positive mentor who inspires and motivates others to dream big. She finished in the “Top 10” of the Visa Global Challenge 2021 and co-founded ECOMMTALKS’ “Women in Fintech” webinar in March 2022, encouraging more women to become changemakers in the fintech industry.

About ECOMMPAY

ECOMMPAY is a payment service provider with an entire fintech ecosystem to perform online payments and withdrawals globally. Using data-driven, tailored payment technologies, ECOMMPAY guides businesses through the rapidly changing environment of e-commerce, using in-depth analytics and solutions that achieve the perfect synergy between conversion and security. Since January 2022, ECOMMPAY has been an official member of the European Business Aviation Association (EBAA) and the Association of British Travel Agents (ABTA).