Digital transformation has been on the collective agenda for years.
It’s already had a profound impact on industries across the board from banking and financial services, to telecom and manufacturing. And the travel industry is no exception.
While high street travel agencies dominated the tourism industry prior to the internet era, they were quick to master this new arena which marked the rise of the online travel agent. Digital has already gone a long way to transforming the moment when customers buy a ticket, reserve a room or book a holiday.
Although the travel industry may have sustained the biggest COVID blow, recent research shows that it would be a mistake to put the digital transformation brakes on. Not least because post-pandemic consumers are not the same as they were. Not only are they more digitally literate, they’re also more cautious, particularly when it comes to payments. And especially when it comes to travel payments.
After all, when any payments issue goes wrong, it’s an issue. When travel payments go wrong on a big scale, it’s a story.
On a mission to discover exactly what floats people's boats when it comes to payments, we commissioned some research. We surveyed over 2,000 people ranging from 18 to 65+ about their attitudes to digital payments. And the findings are as relevant for the travel industry as they are for any other.
So, sit back, relax and let us take you on a journey into the Digital Now, and show you why payments experiences need to change.
How COVID changed consumer behaviour forever (and why the payment experience needs to evolve)
When the pandemic hit, the travel industry was, quite literally, grounded. The ensuing COVID chaos resulted in unprecedented reductions in bookings and cancellations that led to mass refunds. Now that things are starting to pick up again, the travel industry can’t afford for any friction on the onward customer journey – because a poor, fragmented payment or refund experience will lead your customers on a one-way trip to your competitors.
Payments are critical to customer experience, they’re the ‘last hurdle’ in the online journey. 65% of those surveyed agreed that digital payment problems create unnecessary stress for customers. Problems range from having to wait for refunds, needing to find additional information or a card to pay with and being transferred away from a website to make payment. More than half have stopped buying from a specific brand because of poor payment experiences.
And what’s the consumer response to these payment pain points? 44% of people say they simply abandon the transaction.
But it’s not just losing customers in the buying journey that travel brands should be concerned about. Our survey shows that digital payment problems have an emotional impact; with 71% of consumers surveyed saying the payment experience can ‘make or break’ their future relationship with a brand. 72% say 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.
Having to wait for a refund is most likely to make people feel frustrated or angry (40%), having their preferred payment method not accepted is most likely to make them feel disappointed or let down (34%), and they are most likely to get anxious or stressed when a payment method doesn’t feel secure (46%)
But, the good news for the travel industry is that while payments are often the cause of the problem, they are also the solution. So, if you’re looking to rebuild consumer confidence with a trusted payments experience, then there’s a clear formula for success.
Ideal payments experience = instant + convenient + responsible + trust + control.
Customers in the Digital Now demand a trusted payment experience, with 81% saying that online brands have a responsibility to keep money safe and flowing in the economy. And 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%) Meanwhile, embedded payments give peace of mind (45%), save time and effort (45%) and build trust (40%); with 39% appreciating not being sent to another site to complete a transaction.
82% of those surveyed expect the digital payments experience to be instant and convenient, and instant payments and real-time notifications were cited as the top two elements of a trusted payments process.
Leveraging pure payments power
Delivering pure payments power doesn’t happen unaided but, luckily, travel companies no longer have to go to banks for these payment services – FinTechs have arrived on the scene and they have more agile, flexible ways to connect to payment schemes and, in our case , directly with the Bank of England.
By partnering with the right FinTech, travel companies can integrate innovative and secure payment services into their proposition that will deliver an unbeatable experience for their customers.
For example, having Faster Payments plumbed into your tech stack allows you and your customers to send and receive money in near real-time, with immediate confirmation of receipt, delivering both speed and transparency.
Innovations like Payment Initiation, available via Open Banking, enable travel brands to redirect end users to their bank or building society so they can make holiday payments, smoothly and efficiently. This functionality, when combined with easily-reconciled dedicated customer accounts, can also be reversed to send payments back to the customer's account in real-time, for easy refund processing. This not only improves the ongoing relationship with customers by building loyalty and trust, it also addresses the most commonly-cited payment pain-point frustrating 64% of those surveyed - having to wait for refunds.
Onwards and upwards
So, while constantly changing travel restrictions and policies are likely to be a fact of life for some time yet, friction in payment processes doesn't need to be. Improvements here will go a long way to restoring consumer confidence. After all, the majority of those surveyed said they're more likely to trust a brand that invests in modern, customer-friendly payments processes.
The customer journey is one that begins long before the departure lounge and the travel industry now has an opportunity to further reinvent itself by transitioning to a smarter, newer, more flexible payments infrastructure. By doing so, it'll be ready and primed to bounce back with an upgraded customer experience that will delight paying passengers.
Download all the insights from The Digital Now research for more about the types of experiences customers want.