While credit cards are still the dominant form of payment
for travel in the U.S., Amadeus has found that alternative methods of payment
are on the rise. It's a trend that travel advisors should be keeping an eye on
as clients increasingly seek to pay for travel in new ways.
Jean-Christophe Lacour, head of merchant services at Amadeus
Payments, predicted that the use of alternative payment forms, including things
like e-wallets, PayPal and Venmo, will only increase.
"I think cards still have a long future, either as a
direct payment method or indirect, embedded into an alternative payment,"
Lacour said. "But yes, we really think that alternative payments are going
to continue to progress beyond where they are today."
Amadeus and its partner, international electronic payment
specialist PPRO, jointly commissioned the Travel Payments Guide report. The report found
that travelers around the world are choosing alternatives such as e-wallets and
bank transfers to pay for travel more than cash and credit cards combined.
For example, in China, e-wallets account for 49% of the country's
digital travel spend and are twice as popular as credit cards. In the U.S.,
e-wallets, such as Apple Pay, are gaining market share and could overtake
credit cards as the most popular payment method by 2025, Amadeus said.
In the U.S., credit cards are still the most popular way to
pay for travel. Amadeus found that they were used to pay for 57% of travel in
2018, down from 61% in 2017. E-wallets accounted for 23% in 2018, up 3
percentage points from the year prior, and bank transfers accounted for 8%, up
2 points from 2017. Cash accounted for 4%, up 2 points, and "other"
accounted for 8%, down 3 points from the year prior.
The "other" alternative payment services popular
in the U.S., Amadeus said, are, in no particular order, PayPal, Square Cash, Visa
Checkout, PayQuick, Venmo, Zelle and PayNearMe.
Even though alternative payments are growing in popularity,
Lacour said many, including e-wallets, still have credit cards underlying
payments. For example, if a consumer wants to pay for something using Apple
Pay, it is often tied to a credit card (bank accounts can usually be tied to
e-wallets, as well).
But while cards aren't going away, Lacour said, "Customers
more and more focus on convenience, user experience, and therefore they favor
payment methods that give them that convenience where they don't need to enter
card numbers again or where they're getting additional benefits."
Every year, alternative payments take about 3% to 4% from
credit cards' market share in the U.S., Lacour said. Amadeus predicts that will
continue, as consumers are seeking convenience or an "invisible way of
paying." He pointed to Uber as an example: A consumer uses the app to hail
a car, and payment occurs automatically.
"As alternative payments develop, it is absolutely in
the interest of travel agents to support those where they want to be the
merchant of record, because then they really have to match the consumer desire
for convenience," Lacour said.
Keith Waldon, founder of the Austin, Texas-based Departure
Lounge, is among the agency owners who are beginning to think about alternative
"I would certainly be paying attention to it and see
what's happening," Waldon said by way of advice to travel advisors.
"I think it will evolve quickly," he added, "because
there are opportunistic folks who have some really good backing to come in and
disrupt the space, and I think there's a real opportunity for it to be a
positive thing for travel agencies."
Waldon accepts credit cards, cash and checks as forms of
payment, and he uses a merchant account to send clients a secure form to fill
out with their payment method of choice.
He recently partnered with Flywire Payment Solutions, which
enables agencies to receive and manage payments, collect commissions and more.
Waldon said Flywire essentially offers an alternative to
bank wires, which typically carry fees of around $35 per transaction.
Waldon said Departure Lounge is initially hoping to work
with Flywire as a way to accept commission payments from suppliers, who are
increasingly trying to pay advisors commissions in a variety of ways, ranging
from PayPal to payment processing companies that charge the agency a fee. But
down the road, it could potentially offer the agency a way to accept
alternative payments from clients, a request Waldon is seeing more and more; he's
even had some inquiries about using the bitcoin cryptocurrency to pay for
Evan McElligott, president of Longer Vacations in Portland,
Maine, also uses a merchant account and a secure form to accept payment from
clients. That form gives clients the option to pay using Apple Pay or PayPal.
Younger clients especially appreciate a secure form of
payment that doesn't utilize their credit card information, McElligott said.
He added, "What's going to drive the movement is: 'Who
has access to my credit card information?'"