Embedded Payments Help Travel Brands Capture More Consumer Spend

In the competitive world of online travel, direct suppliers joust with online travel agencies for share of wallet.

Worldline’s Consulting Services Global Head of Travel Solutions Laurie Gablehouse told Karen Webster that amid the post-pandemic travel snapback, suppliers — the airlines and hotels — want to capture consumers’ attention and spend, in part to manage the expense of online travel agencies (OTAs) booking and platforms, which still dominate the industry.

“If you can shift some of that business, that’s an obvious cost savings for those suppliers,” Gablehouse said.

Payments are now considered part of the customer experience, and the suppliers have some competitive advantages over the platforms in creating self-service models, she said. Broadening payment acceptance allows consumers to craft the trips they want, with the providers they want, and redeem loyalty and rewards along the way.

Call it the rise of the self-service model, as the brand becomes the de facto travel agent and payments are embedded in the mix.

“We’re seeing the shift towards booking direct instead of using an aggregator because people want to control the aspects of what they are going to do and how their money is being spent,” Gablehouse said.

Simplicity Rules All

Regardless of the payments strategy, the key is simplicity, said Gablehouse. Consumers should be able to venture online; find the brand they favor; pull the trigger, so to speak, when they are ready; and click (or smile) to book and pay. The experience must be seamless, no matter if the searching and booking is done on a laptop or phone, or using wallets such as PayPal, Apple Pay or WeChat Pay, or cards on file to name just a few examples.

There is already some precedent toward a flexible payments strategy that “accompanies” consumers as they travel, as airlines’ rewards programs can follow flyers even when they’re in their seats 30,000 miles up and can get loyalty offers on drinks and food in mid-air. Hotels, too, can and do prompt guests about on-site and nearby events of interest.

But there’s no one-size-fits-all approach for suppliers operating across geographies and currencies when it comes time to move and reconcile the funds flow behind the scenes, she said. Complexity is even more pronounced if and when cancellations happen, where payments must be refunded or credited back from whence they came.

Among the key considerations and questions that need to be asked, as Gablehouse noted: “Where is the money moving across all of my distribution channels, and what am I doing to manage the cost of acceptance across those channels instead of payments just being a ‘thing’ that happens?’ These are critical aspects of a [payments] strategy for any large brand of any sort.”

These questions are especially pressing given the fact that there has been a continued embrace of installments or pay-later options, well beyond the geographic confines of Latin America, where those methods have been firmly entrenched for decades.

“We’re seeing ‘pop-up versions’ of this across different countries around the world, and it allows some customers who are budget conscious to manage their cash flow,” Gablehouse said.

There are any number of hurdles that must be addressed in the background to broaden payment acceptance. For the supplier who may want to offer an installment plan — which is essentially a line of credit — there’s the desire to make sure that they will get paid, so they’ll want to run credit checks. Every country now has different regulations when it comes to payments, taxes and fees. How these installment offers are presented in a unified user experience is a challenge if the products behave differently across geographies.

Asked by Webster about the ways in which advanced technologies are changing the travel industry, Gablehouse cited blockchain technology in the B2B payments world, generative artificial intelligence (AI) and biometrics as conduits of innovation for the payment experience.

She noted that several Worldline enterprise clients have been examining ways to use biometrics and phone-level details to gauge proximity during a trip and “work with” travelers to upgrade or buy new services during their journeys — or in advance of showing up in the first place.

“You won’t have to key in this information,” she said. AI can be harnessed to prompt more finely attuned choices as customers book trips.

For the suppliers, the lure of cutting out the middleman is strong, and managing the payment eco-system behind the booking to deliver a seamless payment experience is critical for the consumer. Otherwise, would-be travelers will vote with their feet.

“To move those customers to you directly, you have to build the brand reputation along with trust,” Gablehouse told Webster.