Mobile is Transforming the Travel Sector – So What’s a Merchant To Do?
February in South Africa means long, hot days, and seemingly endless sunshine (interrupted only by the occasional thunderstorm). Temperatures often top 30 Celsius (that’s mid-eighties for my American friends) and nearly every day is deserving of a braai (that’s barbeque for the rest of the world). But I do spare a thought for my colleagues and friends in Boston, New York, Munich and London (amongst others) at this time of year, as they slog it out through the darkest and coldest months of winter. Who’s to blame them for seeking a bit of light escapism as they plan and book their spring and summer vacations?
For many travel operators, as well as airlines and hotels, these frosty winter days are their ‘peak’ – a time period that demands careful planning, and ongoing vigilance in the face of fraudulent activity (much like Black Friday and Cyber Monday for other sectors). But the challenges for merchants in the travel sector are compounded by the fact that the way in which we plan and book travel has changed so dramatically in such a short period of time.
Mobile is transforming the way that consumers plan and book travel
In 2014, around a quarter of leisure travelers used their smartphone to book travel, up from only 15% in 2013.1 But when it came time to book and pay, the PC was still the device du jour. By 2015 that proportion had grown to 31%, according to Google, with 54% of business travelers having booked travel on their smartphone. Since then, the trend toward mobile has continued, in part driven by improvements in both native apps and mobile websites that have accompanied ever more powerful smartphones.
But these improvements do not take place in a vacuum – they are driven by consumer desire for convenience, speed and simplicity. Merchants in the travel sector therefore need to focus on delivering a smooth checkout and payment experience via their native app or mobile-optimized website, otherwise they risk cart abandonment. This means offering one-touch payment, a range of suitable payment options (including mobile wallets) and a suitable mobile fraud strategy that lets through genuine shoppers. Due to the complexity, we are seeing merchants turn to their PSPs and technology vendors to meet the demands of their customers.
There are more customer journeys when it comes to planning… journeys
According to Google, 94% of leisure travelers also switch between devices as they plan or book a trip, and it’s not as simple as “research on mobile, book on desktop.” There are many potential customer journeys that travel marketers need to account for, and can influence the final purchase decision – and they need to be able to process the payment wherever and whenever the consumer makes that decision.
Cross-channel visibility and data integration is of critical importance, especially as travel planning and booking permeates more of our mobile experience. From review sites (TripAdvisor etc.) to social media (such as Instagram) and tools such as Google Maps, a huge number of the apps we use and websites we visit can influence the purchase decision. Video marketing also plays a huge role – and virtual reality (VR) is waiting in the wings.
Those merchants that can integrate data and provide a smooth and seamless experience across platforms – allowing consumers to start a booking on one device and finish on another – are going to enjoy a bigger slice of the pie.
There are demographic forces as work too. According to research completed by Hipmunk, half of millennials describe themselves as “travel hackers,” meaning they know all of the best sites and methods to get the best travel deals. Meanwhile, only 26% of gen x-ers and 12% of baby boomers share that sentiment. Their mobile devices are at the core of this comfort with planning and booking online.
What’s a merchant to do?
Competition is particularly fierce in native apps, where growth outpaces that of mobile websites. The convenience of one-touch booking (based on stored payment details) and highly personalized experiences enable the kind of seamless experience that consumers are demanding. Payment providers are increasingly able to equip their merchants with tools that help them achieve this – such as mobile software development kits (mSDKs). Merchants should carefully evaluate the capabilities of these technologies, and ultimately work with those that are developer-friendly, saving them time and development effort, and also secure, reducing fraud but still letting through genuine shoppers. In addition to offering simplicity and security, solutions also need to be global by default – the travel vertical requires the ability to sell in countries all around the world, supporting an array of local payment methods that reduce friction. And technology that ticks these boxes should leave merchants some time to plan their own vacations, when the winter ‘peak’ has subsided…
Oh, and did I say South Africa is a great destination at this time of the year?
Related Blog Posts
Open Banking and the Evolution of Digital Payments
The introduction of Open Banking is without doubt one of the most significant changes the European banking sector has seen in recent years. Many banks in the US, Australia and Asia are paying close attention to what’s happening in the UK and other European countries with a view toward implementing similar systems in the future.
What's Next for SWIFT gpi and Cross-Border Real-Time Payments?
Recently, I wrote about the potential benefits of SWIFT gpi for banks. Like any technology, the rate of change is accelerating, making it critical that banks keep pace with the market and with their competition. In 2018, as domestic real-time payments schemes reach near-ubiquity thanks to a combination of regulatory and customer demand drivers, we have seen an accelerated parallel trajectory for cross-border real-time gross settlement (RTGS) payments.
The Mexican Fintech Revolution – ¿Qué onda in Open Banking?
Mexico has joined an elite group of nations, being amongst the first to pass open banking regulations. Specifically designed to open up its financial services and technology sector, the so-called ‘Fintech Law’ appears to have taken notes from PSD2, UK Open Banking, Singapore’s ‘organic’ approach, and others – and balances these against Mexico’s unique context and aims.
ACI’s Lu Zurawski, one of the industry's foremost open payments experts, and Sonia Gomez, a Latin America payments authority, discuss this balancing act; including the drivers, the regulation and the potential benefits.
Turning Impetus into Action: Real-Time Payments in ASEAN
Financial institutions across ASEAN member states are increasing investment in payments, with 64% planning to increase investment over the next 18-24 months, compared to 56% in the broader Asia region and 53% globally. With investment in ASEAN outpacing the global average, the “2018 ASEAN Payments Insight Survey” shines a light on the key drivers for increased payments investment and the expected benefits.
ACI Watford runs first Coding for Girls Camp in Europe
The ACI Watford Office recently teamed up with local West Herts College to run its first Coding for Girls Camp in the UK. The free, one-day event was designed to introduce girls from year (grade) 7-9 to the world of technology, offering a crash course in computer programming; including HTML, CSS and Java. I spoke to Melissa McKendry, VP of retail banking implementation services and Watford Site Leader at ACI, to find out more.
Mid-Year Payments Reflections… And What 2018 Has Left Up Its Sleeve
It has been a while since I had a chance to collect my thoughts, nee, reflections. My all-time favorite movie reminds us all that “Life moves pretty fast. If you don't stop and look around once in a while, you could miss it.” And with this advice in mind, I want to share my thoughts on the ‘Big 3’ of 2018 so far… and prep us all on what to look for as the calendar churns through its last six pages.
Time is Money: A Millennial View of UK Faster Payments’ 10th Anniversary
As a millennial, I’ve often been the butt of jokes of those a little bit older than I am (whether colleagues or my own family). One of the clichés perpetuated is that we are constantly glued to our smartphones: In a way that’s correct, but misses an important point. As a young millennial professional, the most important thing to me is TIME. And that’s the reason my phone plays a crucial role in my life – much to the annoyance of my girlfriend and family. It means I can do things on the move, which in turn makes my life a whole lot easier.
Taking Payments and Fintech for Granted? (A Lyrical Edition)
Based on a very quick search of the Googles, there are 128,014 songs that contain the lyrics “take for granted”— from the likes of Mary J. Blige, Social Distortion, Madness and Frank Sinatra as well as countless other great (and not-so-great) crooners. And that would make for a sizable Spotify playlist… and I do love my Spotify playlists (I’ve been on a Wham! kick lately).
Instant + Open Payments = A Winning Combination
I recently joined a panel discussion at EBAday 2018, alongside representatives from across the payments ecosystem, and the clear consensus was that real-time payments will be the new normal. This was evidenced by some of the interactive polls carried out.
A Rocky Mountain High on Payments Innovation
We were so high last week; in fact, we were a figurative mile high… in sunny Denver for our annual ACI Exchange user conference. And among the myriad highs during the week was our own ‘Un-conference,’ which generated major buzz that sparked an enormous appetite for some tasty innovation. Some of the ideas generated included the following: