Installment payment solution providers that focus on the travel industry say they are becoming mainstream.
“It’s increasingly becoming something consumers want to pay for,” said Tom Botts, chief commercial officer of Uplift, which is the biggest player in the industry. “It’s becoming an expectation of consumers who want this payment option, not just for retail, but also for travel.”
Commonly referred to as “buy now, pay later,” solutions like Uplift allow travel consumers to purchase airfare, cruises, vacation packages, hotels, and other travel products through payment plans. which can range from a few months to more than a year. Buy now, pay later Customers typically receive credit decisions almost instantly, with interest rates determined based on their credit history. Uplift, for example, offers non-compound interest rates between 7.99% and 32% on loans ranging from $100 to $25,000. Payment terms range from three months to 18 months, Botts said.
In April, Uplift added Southwest to existing airline customers United, Frontier, Alaska, Allegiant, Lufthansa and Aeromexico and about a dozen others.
Customers in other travel segments include Carnival Cruise Line, Norwegian Cruise Line, Royal Caribbean International, MSC Cruises, Virgin Voyages, Southwest Vacations, United Vacations and American Airlines Vacations.
Uplift also has partner agent programs with Signature, Virtuoso and Internova.
The company said it has increased its number of active merchant partners by 82% since April 2020 and now has more than 210 travel industry partners.
In an interview in late June, Botts said the previous week had been the biggest revenue week in the company’s history.
Uplift, however, isn’t alone in the travel industry in buying now, pay later space.
Other options abound
San Francisco-based Affirm Holdings, for example, is Delta Vacation’s installment payment partner. And JetBlue works with Goldman Sachs’ MarcusPay.
Meanwhile, the latest player in the US market is UK-based Fly Now Pay Later, which this month began offering direct-to-consumer payment plans for travel purchases made in the US.
The 6-year-old company’s biggest UK customer is OTA Last Minute Travel. Fly Now Pay Later is also partnering with Malaysia Airlines and is in the process of integrating with three other global carriers, said Sophia Melas, the company’s head of partnerships.
Instead of charging interest, Fly Now Pay Later charges a transaction fee, which customers can pay at the time of booking, or by adding the fee to payments, which are made monthly for up to 12 months. Loans range in value from $100 to $4,000.
Consumers can apply for a loan on the company’s website or in its app. Those who are approved receive a virtual debit card, which they can then use to book travel.
Melas said that during the pandemic, Fly Now Pay Later enjoyed a 30% increase in share among its merchant partners who were able to maintain bookings.
“Before Covid, our partners typically saw a 25% uplift in incremental sales with our solution, but we anticipate this to be higher as they leverage payment flexibility as a core recovery strategy,” she said. declared.
Expected growth in the coming years
Indeed, installment solutions, although not new in sectors such as the sale of automobiles and household appliances, are expected to experience substantial growth in the years to come. A June report from Amadeus noted that the share of North American e-commerce transactions conducted using payout solutions is expected to grow from 0.9% in 2020 to over 3% by 2023, according to Cincinnati-based payment processor Worldpay.
In an Amadeus survey of 5,000 travelers last May, 40% said buy now, pay later would encourage them to book travel this summer.
The payment option, Amadeus said, “is an obvious addition that helps drive demand and also encourages travelers to make higher value purchases or perhaps add an ancillary service.”
But the travel tech provider also noted that the concept has drawbacks. Fifty-four percent of survey respondents had concerns about the repayment process and 44% had concerns about the interest rates charged.
Botts, however, said Uplift’s installment service provides options for travel consumers, especially those who don’t have traditional credit cards or prefer to keep their travel expenses clearly delineated from other credit purchases. .
Uplift and Fly Now Pay Later also work directly with travel advisors. The companies’ agency platforms allow travel advisors to make full payments to suppliers at the time of a customer’s purchase so that they can receive the commissions owed to them.
The customer, on the other hand, pays the installments directly to Uplift or Fly Now Pay Later according to the agreed schedule. Lenders also bear the risk of default, the companies said.