Neither pandemic flareups nor inflation will deter adventurous South Korean travelers from booking travel in a recovery year, but it’s an advanced market that demands more from travel experiences, how travelers are able to pay, and in the case of suppliers, be paid.
Whatever the market, it comes down to solid execution of localization strategies on a global scale, as Worldline Global Head of Travel Damien Cramer told PYMNTS’ Karen Webster.
Saying that Asia is still lagging the West by “a year or a season, if you like,” Cramer explained, “South Koreans, like the Singaporeans where I am, and like some of the other perhaps more developed markets in Southeast Asia, are a bit ahead of some other markets, and are definitely looking forward to, and are definitely significantly planning, travel.”
In early June, the South Korean government relaxed its COVID-19 restrictions, clearing the so-called “revenge travel” surge for takeoff.
To make the most of it, travel suppliers must cater to local and regional payment preferences or risk running afoul of foreign exchange (FX) snags that can kill a transaction, Cramer said.
“The biggest challenge, if I was to make it really basic, is the language and cultural experience difference,” he said. “If you’ve ever branched out and jumped on a native [eCommerce] website or a native [travel] website in Indonesia, the product, the way things are presented, and the user experience are quite different to the way that a lot in the West like to see it.”
For this, the move is to embrace and reflect cultural, linguistic and regional differences and present them appropriately for South Korea — or any distinct geographic market — as it can’t be assumed that what works even in a bordering nation will work at all in neighboring markets.
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Local Payments Convert
Pointing to the rising costs of international travel, Cramer said, “what we need to be conscious about is that embedded in that expensive purchasing decision is a significant level of trust — trusting the way in which the payment solutions are presented, the types of payment solutions presented, are these payment solutions that I know and trust and recognize?”
Yes, Visa and Mastercard are present, but they go head-to-head with “a huge number of other very localized payment options where consumers have high levels of trust, and they’re highly embedded in that market,” he told Webster.
“I think we’ll see situations where customers say, ‘if the airline … that I want book is not going to present me with the ability to pay with my Samsung Card, but I can get onto an online travel site that will do that, I may be more inclined to utilize that secondary payment option or that secondary channel, rather than the primary channel,’” he said.
That’s a failed conversion and a lost customer — two gut punches all players are trying to avoid.
Approval rates enter the discussion urgently when cross-border payments are involved, and there are issues that travel suppliers and payment providers must solve.
Cramer said, “there is a dark art, I think, associated with approval rates, how and where you route transactions,” Cramer said. “One of the things that does hold principally true is the closer that you can get through a localized network and into a localized solution, the far more likely that you are to get an approval.”
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Data, Trust and ‘Revenge Travel’
The pain and friction of international routing and approvals for big-ticket travel purchases that set off alarm bells with fraud systems underscores the role of trust in these transactions.
“Travel is an aspirational service,” Cramer said. “What you get is a market that is ripe for some level of fraud. People want it, some people can’t afford it or want a better product or a better service or whatever, and it does lend itself to levels of fraud.”
Calling strong customer authentication (SCA) models “a really good way to combat that,” Cramer said new authentication capabilities are a vast improvement over last-generation solutions that he called “chunky and clunky” and built to protect merchants more than consumers.
Meanwhile, he said those SCA solutions scoring around fraud and risk are based on data points.
“There are really valuable data points [being collected],” he said. “The data points that we have as a large payments processor as well that we can add to that are all really important and valuable in relation to strong customer authentication.”
Worldline will be introducing authenticated payments in South Korea as part of an ongoing expansion in Asia and other markets.
Data goes a long way in everything from authenticating the purchase on the front end and issuing a refund on the back end should that be needed, as so many have been since 2020.
“To a great extent, the rails, the infrastructure and the processes [needed] to be able to manage reverse flow and overall risk were not in place,” he said. “We had to learn by doing. We learned by failing in some instances. We learned by co-creating with the industry how to address this significant market dislocation.”
Post-pandemic, there’s “a lot more savviness and understanding, by necessity rather than by pure strategic decision-making intent, on processes, systems and services that help manage and protect customers and funds … and the whole mechanism around how refund processes work.”
Call it recovery, bounce back or revenge travel, but pent-up demand in hot markets like South Korea serves as a bellwether to the wider global recovery, and there are new expectations.
“Customers are not necessarily interested in the buy now pay now, no refund, no change fare,” he said. “I’ll do the buy now, but I want the refund. I want the changeability because there’s a level of uncertainty. Systems and processes across merchants [and] payment service providers like us that are handling and managing money on behalf of them, right through the network to issuers have been put in place to support that. Every crisis creates an opportunity.”
It’s an opportunity with a mission. Cramer pointed to a study that showed 60% of South Koreans are “excited” about technology’s potential to personalize their travel experience.
“I was looking at that and going, ‘OK, 60%, that’s pretty good,’” he said.
And a lot of opportunity to tap into.
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