A growing number of customers have changed their buying habits during the pandemic, opting for flexible finance options like buy now, pay later over traditional credit. But should travel brands adapt and implement these alternative payment methods for their customers?
In this guide, we’re looking at buy now, pay later and whether it can help the travel industry recover after Covid.
What is buy now, pay later? 🧑✈️
Unlike traditional credit, buy now, pay later (BNPL) gives customers the option to finance their purchases over agreed monthly instalments. A customer buys the product or service they want and pays the amount back over a set period – usually four instalments, though it can vary.
Many retailers now offer BNPL products to drive up their sales and increase average order value (AOV). It works particularly well for higher-priced items, as customers don’t feel the financial burden of covering costly purchases in one go.
Everything from furniture to clothing stores currently use BNPL options at their checkout. And the trend looks set to continue as alternative payment methods become one of the most used ways to shop on the web, including in the travel industry (more on that in a bit).
Why is BNPL so popular with consumers? ✈️
To put it simply, customers love the flexibility BNPL offers them. Since Covid and the subsequent lockdowns, buyers – especially younger demographics – have become increasingly aware of their finances. Millennials and Generation Z are bucking traditional finance trends such as credit cards and opting for alternative methods.
Younger generations are savvy about their finances and don’t wish to load themselves with debt containing high APRs. Therefore, options like BNPL – where there are set repayment schedules – make more sense and are seen as a smarter way to use credit.
And while it’s primarily popular with millennials and Generation Z, older demographics are also taking note. Having the ability to split payments for the cost of a purchase is appealing, no matter the age.
Buy now, pay later stats 🏖️
According to research from PYMNTS.com, 87 per cent of shoppers aged between 22 and 45 are interested in flexible finance services. Millennials lead the adoption of BNPL, with more than 60 per cent having tried the payment methods.
Almost four in 10 Brits have used BNPL, with over half (52 per cent) tyring the payment method during Covid. Of the reasons people use BNPL, 44 per cent said it was for the convenience and flexibility when making a purchase.
Perhaps more interestingly, almost 10 million Brits said they avoided using retailers who didn’t implement an alternative payment method like BNPL at checkout. This shows the growing importance of offering other payment options for retailers and travel brands.
How can it help travel brands? 🌴
Travel is deemed a luxury expense, whether you’re paying thousands to fly off to far-flung destinations or hundreds for a short city break. However, the numbers easily mount up once you factor in flights, accommodation and other aspects like itineraries.
Therefore, the need for more payment options post–Covid takes on greater importance. Methods like BNPL can help rejuvenate pandemic-weary customers who are mindful of their budgets but still want to enjoy a much-needed holiday at 12-months-plus of lockdowns.
For many, even the simplest trips abroad could become a financial issue. That’s where buy now, pay later helps, as it arms customers with increased purchasing power and financial freedom to book a holiday. There is no need for travellers to front the costs all in one go, and they can use BNPL to spread the payments in a way that suits them.
Should your travel brand use buy now, pay later? 🏊♀️
As payment trends change, retailers need to keep up with these new demands. That includes travel brands who are hoping for a purple patch this summer and beyond as holidaymakers regain their confidence to travel again.
By offering alternative payment methods like BNPL, you can empower customers to feel good about booking their trips. As pent-up demand strikes, you will be well placed to meet the needs of post-Covid travellers with payment options that give them more freedom.
Having a BNPL option can help you remove friction at checkout and even encourage travellers to pay that little bit extra for the holiday they’ve always dreamed about booking. The result is an increase in basket size and an uptick in sales, thanks to the financial flexibility offered by BNPL.
Gain now, and later
The way in which customers shop online is changing, and the travel industry is set to see more demand for flexible payments. As the travel brand that offers BNPL options, you can increase trust with customers while driving up your sales as people flock to your site to book their next holiday.