Installment payment providers that focus on the travel industry say they are becoming mainstream.
“It is increasingly becoming a way for consumers to pay,” said Tom Botts, commercial director of Uplift, which is the largest player in the industry. “It is becoming an expectation of consumers who want this payment option, not only for retail, but also for travel. “
Commonly referred to as “buy now, pay later,” solutions like Uplift’s allow travelers to purchase airline tickets, cruises, vacation packages, hotels and other travel products through travel plans. payment can range from a few months to over 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 as little as three months to 18 months, Botts said.
In April, Uplift added Southwest to existing customer airlines United, Frontier, Alaska, Allegiant, Lufthansa and Aeromexico and about a dozen more.
Customers from other travel sectors 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 agent partner 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 partners in the travel industry.
In an interview at the end of June, Botts said the previous week was the most profitable week in the company’s history.
Uplift, however, isn’t the only one in the travel industry to buy now, pay later.
There is no shortage of other options
Affirm Holdings, based in San Francisco, 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 company’s biggest UK customer, 6, is OTA Last Minute Travel. Fly Now Pay Later is also a partner of 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 guests can pay at the time of booking, or by adding the fee to payments, which are made monthly for up to 12 months. The 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 saw a 30% increase in the share of its merchant partners who were able to maintain bookings.
“Before Covid, our partners typically saw a 25% increase in additional sales with our solution, but we expect this to be higher as they take advantage of payment flexibility as a core recovery strategy,” she said. declared.
Growth expected in the coming years
Indeed, installment solutions, although not very 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 released by Amadeus noted that the share of North American e-commerce transactions conducted using tiered solutions is expected to increase from 0.9% in 2020 to more than 3% by 2023, according to the Cincinnati-based Worldpay payment processor.
In an Amadeus survey last May of 5,000 travelers, 40% said buying now, paying later would encourage them to book travel this summer.
The payment option, Amadeus said, “is an obvious addition that helps stimulate 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 had drawbacks. Fifty-four percent of survey respondents were concerned about the repayment process and 44% were concerned about the interest rates charged.
Botts, however, said Uplift’s remittance service provides options for travel consumers, especially those who don’t have traditional credit cards or who prefer to keep their travel expenses clearly delineated compared to others. credit purchases.
Uplift and Fly Now Pay Later also work directly with travel counselors. The agency platforms of the companies allow travel counselors 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.