Travel makes up a significant portion of Buy Now, Pay Later (BNPL) purchases, and for good reason.
BNPL in the travel industry allows businesses to increase sales and travelers to fulfill their vacation dreams. The global Travel Now Pay Later market will reach USD 98.6 billion by 2033.
The payment method enables travelers to book trips immediately, spreading payments over time and making travel more accessible. No burden of upfront costs.
For travel businesses, offering flexible payment options leads to higher conversion rates, increased booking values, and improved customer retention.
The Rise of BNPL in Travel
Travelers love the flexibility and convenience BNPL offers, while businesses reap the rewards of increased bookings and customer satisfaction
Imagine planning your dream vacation without the stress of emptying your bank account in one go. That’s the magic of BNPL for travelers. It allows them to book flights, hotels, and experiences without the immediate financial pinch.
Travelers can spread the cost over time, making those bucket-list trips suddenly within reach. Plus, it’s a lifesaver for last-minute bookings or unexpected travel needs.
Benefits for Travel Businesses
Now, let’s talk about why businesses are falling head over heels for BNPL flights and travel payment options.
Skyrocketing Sales
BNPL is a powerful sales booster. Travel companies offering BNPL options see their conversion rates soar. When customers can pay in bite-sized chunks, they’re more likely to hit that “Book Now” button.
Bigger Bookings, Better Revenue
Here’s a fun fact: travelers using BNPL tend to spend more. Without the constraint of paying the full amount upfront, customers often upgrade their travel packages or add extra experiences to their itinerary.
Happy Customers, Repeat Business
BNPL creates a win-win situation. Travelers get the trips they want, and businesses get satisfied customers who are more likely to return. It’s like planting seeds for future bookings.
Competitive Edge
In the crowded travel market, offering BNPL can set a business apart from the competition. Especially younger generations who are used to flexible payment options in other areas of their lives, BNPL is an expected payment option.
The rise of BNPL in travel reshapes how people plan and book their adventures. For travel businesses, it’s an opportunity to tap into a growing market of travelers eager for flexible payment options. So, if you’re in the travel biz and haven’t hopped on the BNPL train yet, it might be time to consider punching your ticket.
BNPL vs Payment Installment Plans
When it comes to flexible payment options, Buy Now, Pay Later and payment installment plans seem similar at first glance. However, they have distinct features that set them apart.
Let’s break down the key differences and explore why installments might be a more secure option for your business.
Definition and Structure
BNPL allows customers to make purchases and pay for them at a future date, typically in short-term installments. It’s often integrated into the payment flow of online shops, providing instant credit at the point of sale.
Payment installment plans, on the other hand, refer to any bill paid off over time in consecutive payments. These can be offered directly by merchants or through third-party processors.
Credit Risk and Approval Process
One significant difference lies in who bears the credit risk. With BNPL, the BNPL provider typically assumes the credit risk. This can lead to less stringent approval processes, potentially attracting younger customers with less established credit histories.
Installment plans, especially those offered through traditional banks or credit cards, often involve a more thorough credit check. The credit risk is usually borne by the issuing bank and coupled with a stringent Know Your Customer process.
Interest and Fees
Both BNPL and installment plans often offer interest-free options if paid within the agreed timeframe. However, BNPL services might charge late fees for missed payments. Traditional installment loans usually have interest charges built into the repayment structure.
Repayment Period
BNPL typically involves shorter repayment periods, often within weeks or a few months. Installment plans can span longer timeframes, allowing for more extended repayment schedules.
Why Installments Might Be More Secure for Your Business
- Reduced Credit Risk: With traditional installment plans, your business is less likely to bear the brunt of credit defaults.
- More Comprehensive Vetting: The stricter approval process for installment plans can lead to a more financially stable customer base.
- Predictable Cash Flow: Installment plans often provide more structured payments over a longer period, contributing to more stable cash flow.
- Lower Risk of Impulsive Overspending: The more thorough approval process for installment plans may discourage impulsive purchases, potentially leading to fewer returns and chargebacks.
- Established Regulatory Framework: Traditional installment plans often operate within well-established regulatory frameworks, providing clearer guidelines and protections for both businesses and consumers.
By offering the ability to pay in installments, you provide your customers with financial flexibility and maintain a more secure position for your business. This approach helps boost sales, increases customer loyalty, and creates a win-win situation.
Installment plans are basically a white-label BNPL. In general, customers won’t be able to tell the difference.
ADD PAYMENT INSTALLMENTS TO YOUR STORE
Boosting Conversions with BNPL and Installments
Travel businesses can significantly increase their sales and customer base by offering flexible payment options. Let’s explore how these payment methods can boost conversions and improve your bottom line.
Increased Accessibility for Travelers
BNPL and installment plans make travel more accessible to a wider audience. By breaking down travel expenses into smaller, manageable payments, customers who might hesitate to book can afford their vacations.
This increased accessibility can lead to:
- Higher booking rates for luxury or high-end travel packages
- More spontaneous travel decisions, as customers don’t need to save up the full amount upfront
- Increased travel frequency, as customers can manage multiple trips within their budget
Higher Conversion Rates
Offering flexible payment options can dramatically reduce cart abandonment rates, which are notoriously high in the travel industry. When customers see a $5,000 vacation broken down into $500 monthly installments, it suddenly becomes much more attainable.
This psychological shift can lead to:
- Lower hesitation at checkout
- Increased willingness to upgrade travel packages or add extra experiences
- Higher overall conversion rates for your travel business
Larger Booking Values
BNPL and installment options often encourage customers to spend more on their travel experiences. Without the constraint of paying the full amount upfront, travelers tend to:
- Upgrade their accommodations or flight classes
- Add extra activities or experiences to their itinerary
- Extend their trip duration
For example, Atome, a BNPL provider, reports that customers are more likely to consider options beyond the lowest-priced tickets when BNPL is available.
With BNPL and installments, your travel business can boost conversions, increase booking values, and build stronger customer relationships. As these payment methods continue to gain popularity, they’re becoming an essential tool for growth in the travel industry.
Get Started with BNPL and Installments
The travel industry is embracing a new era of financial flexibility, and BNPL along with installment plans are leading the charge. These payment options are powerful tools that can transform your travel business.
By offering BNPL and installment plans, you’re not just making travel more accessible. You’re opening doors to higher conversion rates, bigger bookings, and happier customers. When travelers can spread their payments, they’re more likely to book that dream vacation or add those extra experiences.
But it’s not just about boosting sales. These flexible payment options can set your business apart in a crowded market. They show that you understand and cater to your customers’ financial needs, building trust and loyalty.
The future of travel payments is flexible, and it’s here now. Don’t let your business get left behind. Embrace these payment innovations, and watch your travel business soar to new heights. Your customers – and your bottom line – will thank you.
