The travel industry is experiencing a renaissance, fuelled by technological advancements, changing consumer preferences and a post-pandemic surge in wanderlust. But how will this upswell for the travel market affect payments in the sector?
To unravel travel’s payment complexities, we've engaged with a diverse array of voices within the travel ecosystem to get a panoramic view of where travel is headed.
In this series of snapshots, we’ll get some perspectives on the most significant trends shaping the future of payments in travel this year, exploring their potential to redefine our experiences and challenge the status quo.
- Flexibility to address failed payments
- Payments as a strategic point of difference
- Automation as a fundamental in travel payments
- Tackling fraud
1. Flexibility to address failed payments
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Up in the Air Travel Payments Strategist, Paul Van Alfen
"If you look at the amount spent on search, a website, or marketing in order to get the customer onto your page and make the booking, it's significant. If that customer then goes on to check out, only to fail because the payment is not working or the currency is not supported, that is a big loss of money and effort. So systems need to evolve accordingly.
"In terms of trends around payments, there is definitely a trend towards flexibility. This is often using virtual card mechanisms and existing global scheme rails to move funds between the sellers and the suppliers, in a way that the seller is decoupled from the process.
"That means buyers being able to use different forms of payment and sellers able to handle different products through one checkout, or able to use a different currency, or accept a local form of payment that an end supplier may not be able to necessarily support themselves.
"In embracing that flexibility, sellers can automate a process that not only follows the individual customer’s preferences, but also runs smoothly over existing rails and comes with the ability to be fully reconciled, fully controlled and so on.
"If travel payments businesses can successfully decouple the complexities merchants already manage, through a solution that also takes on the complexities that come with accepting payments in many different countries and channels, and harmonise that through payments to suppliers in a single way, that is something that makes payments much easier for the market, and there is a real value in that. It will be interesting to see how that ambition develops through 2025."
2. Payments as a strategic point of difference
Triplink Head of EMEA, Rob Farmer
"Payments are certainly more strategic than they ever have been, largely because travel firms recognise the importance of taking payments seriously and using them intentionally to grow their businesses.
"I think that the payments industry does a pretty good job of promoting the value of payments and it’s up to the travel industry to enhance their understanding, develop in-house expertise, and strengthen operational capabilities to extract that strategic value offered by modern payment technologies.
"In terms of technology, cards are still going to dominate the market in 2025, I don’t see that changing to any great extent. I do see credit becoming more popular as the cost of living increases but people still want to go away on holiday and choose to spread the cost of that transaction over a broader amount of time.
"Flexibility matters in travel payments because people that are buying travel products need a choice of payments that suit their individual needs. If you’re not able to offer those choices of payments to broadly address all the demographics that are buying from you, then you’re inevitably going to lose business.
"However it is made, a failed payment is going to be massively damaging, especially with a high value purchase. With a lot of people, if they are taking time to book an itinerary or a suite of products with you and the transaction fails, there is a good chance they might look at the broad array of options in the travel sector and just go somewhere else, so you lose that customer forever."
3. Automation as a fundamental in travel payments
Cyberlogic CEO Stergios Panagiotakis
"The travel industry is becoming more of a technology industry – but I can say that because technology is what we do as a business! At the basic level, having connectivity tools for companies that are active in this area is a must now, because technology breaks down barriers, makes things more efficient and makes the market more qualitative – and competitive as a result.
"That level of technology means a market with better service for everybody, driving down costs and allowing higher returns on investments.
"Things are getting complicated in travel – everybody now works with everybody else. The whole supply chain has become more integrated and technology is changing the landscape. Of course the traditional models still apply but technology definitely affords people the tools to be more competitive for the new era since Covid-19.
"For us, automation is the most important thing. Automation is there to bring down the time and the cost, to provide speed and sustainability in core operational models." Nowadays it is essential for companies. Using automation is sensible to grow, but also just to survive.
4. Tackling fraud
Modulr Founder and CEO, Myles Stephenson
"Fraud is a persistent problem in travel. In recent Modulr research, 83% of European travel businesses claimed that the risks associated with fraud have increased in the past three years. The impact of payment fraud can be massive – Juniper predicts that merchant losses will surpass $362 billion between 2023 and 2028.
"The methods fraudsters use to target the travel industry are wide-ranging, with travel agencies particularly vulnerable to chargeback fraud due to their intermediary role between customers and airlines, and credit card or other personal information being stolen through weak links between intermediaries and third-party vendors across a long, global supply chain.
"These complexities mean tackling payment fraud in the UK and beyond requires a multifaceted approach, leveraging new technology and recent significant advances in AI. Real-time fraud detection will be paramount, driven by AI and machine learning algorithms to flag dubious transaction patterns. Suspicious activities spotted through keystroke dynamics and mouse movements can be screened by behavioural biometrics to add another layer of security on top of user authentication.
"Enhancing existing security measures will also play a critical role. Single-use virtual cards add substantial security to transactions and expanding the use of tokenisation and advanced encryption protocols will protect data both during transmission and storage. Robust multi-factor authentication (MFA) solutions, moving beyond simple passwords to incorporate biometrics and one-time codes, will further strengthen user authentication. The wider adoption of Verification of Payee (VOP) systems, similar to the UK’s Confirmation of Payee, will ensure that payment details match the intended recipient's account information, directly addressing the issue of misdirected payments due to fraud or error.
"Crucially, fostering secure data sharing platforms between financial institutions and non-financial entities will create a more holistic view of fraud trends, enabling quicker identification and mitigation of emerging threats.
"Regulatory and industry initiatives will provide the framework for these advancements. Continued enforcement of Strong Customer Authentication (SCA) requirements, as mandated by regulatory requirements such as the 2nd Payment Services Directive (PSD2), will add a crucial layer of security to electronic transactions. The strategic use of Open Banking and secure APIs will enable authorised third-party providers to access payment data with customer consent, fostering innovation in fraud detection and prevention. Strengthening collaboration with law enforcement agencies is also essential, facilitating information sharing, efficient tracking of fraudsters, and effective prosecution."
Not sure what's next for your payments?
If you don't know what the year ahead might have in store for your business, speak to one of our payments specialists to see how faster, automated or more efficient payment capability could make the difference for you.
