Research has revealed 66 percent of travel companies are seeing their profit margins impacted by outdated or complicated payment systems, with nine in 10 expected to prioritize modernising their financial operations this year. In a report released by global payments and financial platform, Airwallex, and travel research company, Skift, the travel industry is also being challenged by shifting payment preferences since the COVID-19 pandemic.
While revenue from cross-border payments is on the rise, the diversity of payment methods in different markets “complicates transactions for 70 percent of travel companies.”
Jack Zhang, Co-founder and CEO at Airwallex, said:
“As global travel continues to boom, travel companies increasingly rely on quick and seamless cross-border payments to surpass customer expectations at every touchpoint. However, our latest study shows that slow and outdated payment processes are increasing the cost of moving money internationally, which is eating into their profits – modest at the best of times.”
As noted in the update:
“Modernizing their financial operations with a unified and scalable payment solution will be critical to reducing the cost and friction associated with managing cross-border transactions. For smaller players, this can be what levels the playing field, enabling them to compete with larger, more established counterparts.”
Skift and Airwallex surveyed 473 travel executives “in April 2024 across seven global markets — Australia, China, Hong Kong SAR, Israel, Singapore, the United Kingdom and the United States.”
The survey respondents confirmed that they “make decisions about payment processes and financial operations for a travel company across the sector including online travel bookings, travel operators, tours and activities, and destination management.”
Rafat Ali, CEO and Founder of Skift said:
“Our survey of global travel executives uncovered new, unique and even surprising insights into why unified payment and financial systems are critical in meeting today’s traveller expectations. Amid an unprecedented rise in international tourism, the report intends to give travel companies a framework to expand their knowledge base and build more efficient, effective and profitable businesses through modernised payment and financial operations systems.”
The findings provide a unique perspective on “the financial challenges and opportunities that companies face as they grow and operate on a global scale.”
It offers rare insight into the issues travel businesses experience “with end-to-end payments and financial operations, especially with the growing trend of cross-border transactions.”
Travel customer payment preferences are shifting with local payment methods being increasingly used.
Credit cards, debit cards and digital wallets remain “by far the most common customer payment methods.”
However, travelers are increasingly “using local payment methods or peer-to-peer payment apps, which can vary widely by market.”
88 percent of travel executives agreed that there “has been a shift in how customers prefer to pay since the COVID-19 pandemic.”
Local payment methods and peer-to-peer systems “are also rapidly gaining popularity, especially in Asia.”
Handling a variety of payment types, “across different markets, is becoming increasingly complex for 70 percent of travel companies.”
Cross-border transactions soar, but bring significant global payment challenges.
Cross-border transactions are now commonplace “with nearly 40 percent of travel executives reporting half of their revenues to be from international customer payments. Meeting different market payment needs, foreign exchange (FX) fees, and managing multiple supplier and vendor payments in numerous countries hinder travel companies’ ability to expand their supplier or vendor network in new markets.”
Methodology:
Skift and Airwallex surveyed 473 travel executives “in April 2024 across seven global markets — Australia, China, Hong Kong SAR, Israel, Singapore, the United Kingdom and the United States.”
To qualify for the survey, respondents confirmed “that they make decisions about payment processes and financial operations for a travel company in one of the following sectors — online travel booking, travel operators, tours and activities, or destination management. Approximately 80 percent of respondents work for small- to medium-sized travel companies, defined herein as those comprising 20 to 600 employees.”