There’s no denying the devastating impact that Coronavirus had, and continues to have, on the travel industry. Seemingly overnight, the world came to a near standstill and, as planes were grounded and countries locked-down, so did an entire sector. The global travel restrictions resulted in unprecedented reductions in bookings and the cancellations led to mass refunds - not all successful, as the headlines attested.
While much is still uncertain, what is becoming increasingly clear is that travel won’t be the same as it once was. Relaxed cancellation and rebooking policies from airlines and other travel suppliers are likely to be here to stay. Consumers may well be suffering from COVID-induced cabin fever, but memories of the travel turbulence will mean that flexibility and refund policies will continue to be front of mind.
How fast the tourism industry bounces back will, to some extent, depend on whether it can make the changes necessary to regain trust and increase consumer confidence. And, as recent research suggests, the industry would do well to start with the processes at the heart of its customer experiences – the payments.
So, join us as we take a look at how payments power is the key to delivering the transparency and flexibility that the travel industry needs to survive in the new normal.
At the threshold of a new age of travel
The far-reaching consequences of Coronavirus will change the face of the tourism industry and redefine travel as we know it. Constantly changing restrictions and immigration policies are likely to be a fact of life for some time yet and the industry will be subject to increased scrutiny from customers looking for reassurance that their bookings and deposits will be protected.
Recent research has shown that one of the most, if not the most, important ways businesses gain customer trust and confidence is through delivery of a friction-free payments experience. 77% of people surveyed on the subject said that they’re more likely to trust a brand that invests in modern, customer-friendly payment processes and 71% said the payment experience can ‘make or break’ their future relationship with a brand.
72% said that outdated and inefficient payment processes can undermine their experience as a customer and the tolerance threshold is low, with 78% agreeing that there is no excuse for online brands to have outdated, inefficient payment processes.
How to build a trusted payments experience
Sub-par customer payment experiences typically arise from slow, manual and fragmented processes, and a lack of confidence that transactions have taken place as expected – because of a lack of real-time capability and/or poor traceability. Solving this problem is a great place to start in removing friction and delivering a great customer experience. And the rewards for doing so are considerable. 53% say that a trusted payments experience would encourage them to use the online service provider again and reward them with their loyalty.
So, what are the elements of a convenient yet trusted payments experience? Our research shows that these include instant payments (53%), instant notifications (51%) and ease of use (45%). These fuel loyalty and increase both spend and the likelihood that consumers will recommend you.
And the overwhelming majority of people also agree that the digital world needs great digital payment experiences.
Digital technologies are reshaping financial services
Digital technologies are not only reshaping the world, they’re transforming the banking and financial services landscape. What was once a relatively level playing field is now being disrupted by a new generation of players.
Agile, technologically-enabled FinTechs offer account infrastructures that remove the need for travel businesses to rely on traditional bank accounts to make and receive payments or hold funds on behalf of travellers.
Digitally-driven payment platforms now offer an easier, more reliable and (crucially) more transparent way to hold and move money. Individual E-money accounts can be created for every customer booking, or every supplier to be paid, for a clearer view of monies held and easier reconciliation.
Many time-consuming and manual processes can also be automated, including outbound payments to travel suppliers and refunds back to customers where necessary. Bookings can be reconciled to each outbound payment with no manual intervention.
Direct access to the UK Payments network provides a flexible and faster range of payment options into and out of accounts, as well as access to innovations such as Payment Initiation. Payment Initiation Service Providers (PISP), such as Modulr, are authorised to initiate payments on behalf of a customer. For travel agents and tour operators, the benefits of Payments Initiation include being able to redirect end-users to their bank or building society so they can make payments smoothly and efficiently. Also, sending a refund to a customer is far easier as payments can be sent back to the customer's account in real-time.
OTAs hold all the cards
One example of how payments power can help the travel industry is how virtual cards can be used.
Innovations such as virtual cards are great way of helping consumers with a greater degree of financial protection and more immediate access to refunds in the event that something (or, in the case of COVID, everything) goes wrong. Even if it’s a process that the customer isn’t aware of.
Virtual cards can be created by OTAs and used for outbound payments to suppliers like airlines, hotels etc. Unique card numbers can be generated for each passenger’s payments, making the whole payments and reconciliation process a lot simpler. This also makes it easier for the OTA to identify all payments made on behalf of that customer in the event of a cancellation or refund. And, if the supplier refuses a refund, a chargeback can be raised with the card acquirer (usually Visa or Mastercard).
All of which means that the OTA can issue the refund quickly, knowing they’re likely to get the money back from the suppliers with relative ease (at worst, having to wait for the chargeback process).
What’s more, a lot of this process can now be automated with virtual cards generated automatically once the customer has made the initial payment (for example). This can happen using webhook and real-time notifications, building the functionality as a standard part of the process.
Companies who weren’t already doing this may have found it more difficult to track and complete refunds in a timely manner – with so many more moving parts and information to find, it was difficult at a time of crisis.
Rebuilding consumer confidence with pure payments power
In summary, Coronavirus has had a devastating effect on the travel and tourism industry. But, if the industry is to survive the impact of the virus as well as the waves of changes and attitudinal shifts that are likely to hit in its wake, the industry needs to proactively embrace the innovations and digital technologies that will allow it to evolve and meet the demands of the post pandemic era.
Harnessing fintech-enabled payments power will help the industry take the collective and proactive steps needed to not only adjust to the new normal, but ultimately to come out stronger, and better, as a result.