Buying travel online has, for the most part, relied on the use of established Western-based credit and debit cards. Though these work well, they are inadequate for travel sellers’ long-term profitable growth.
Millions of new online travelers from emerging markets are redefining the demographics of travel. Developments in the financial services industry, coupled with a fragmented local payment environment, require travel sellers to consider supporting locally preferred payments to attain their online travel revenue goals. Travel sellers need to remember that credit and debit cards account for a minority of payments in many developing markets — 13% in Russia, 37% in Mexico, and 44% in Brazil — versus 61% in the US, 79% in Australia and New Zealand, and 82% in Canada.
To facilitate “frictionless” online commerce in travel, travel sellers should explore which locally preferred payment options make sense. Travel sellers that don’t evolve their online payments may pay more to process payments than they need to and garner fewer conversions. Among the approaches discussed in this report are accepting more foreign currencies (and using multicurrency pricing to make it easier for travelers to pay in their native currencies), mobile wallets, installment payments, and direct debit. Moreover, travel sellers need to understand that because other businesses including retailers and quick serve restaurants have begun to use these, travelers will expect travel sellers to follow — and within a reasonably quick time frame.
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