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Ever since the pandemic subsided, there has been a huge spike in the demand for the travel and hospitality sector. In fact, recovering from the impact of COVID-19 by the third quarter of 2022-23, the hospitality industry had touched the occupancy of 70 per cent.
But often some customers drop off during the checkout cancelling their plans or looking for other alternatives.
Well, what stops them?
Many times, the high costs of the trip dishearten the customers, especially when they have to pay the full costs upfront. They end up aborting their travel plans or postponing them till they have saved up enough funds for it. Sometimes, they start looking for cheaper travel options.
However, ever since banks, travel companies and third-party lenders have come up with BNPL solutions, there has been a surge in customers. Although they currently form just 1% of the gross merchandise value (GMV) of travel agents, these loans are expected to increase to 5% of the total GMV by next year.
In fact, there is a new lingo for the travel version of BNPL – Travel Now Pay Later (TNPL).
Travel Now Pay Later – The New Phenomenon Increasing the Industry’s GMV
Most e-commerce sites and online stores have enabled BNPL (Buy Now Pay Later) services for their customers. Now, travel websites and apps also want to provide similar services to make travel experiences more accessible for customers.
BNPL is where cash-strapped individuals can avail of services or purchase items on credit that they can repay later without interest. There is usually no fee unless a fine is charged for late or missed repayment.
BNPL is one of the fastest-growing payment methods that is expected to become a $99 billion market by 2024 driven by customer demand.
Similarly, TNPL lenders also offer the option to customers to make bookings for travel now and pay later. Customers can repay in EMIs, most of them being no-cost EMIs. This helps in splitting a huge travel cost into small instalments by reducing the upfront costs to a low amount or even ZERO.
With digital lending pacing up and rising customer demands for BNPL options, multiple fintechs and banking partners are offering these services. BNPL lenders and travel companies want to partner with each other to scale up their respective businesses.
However, integrating with each BNPL partner becomes a time-taking and cumbersome process for travel business merchants. It often requires specialised technology as well.
Here, Cashfree Payments comes to your rescue. Save your time and efforts with a smooth and single integration process.
We offer a large network of partners with our BNPL Suite in one-time integration.
Why Integrate with Cashfree Payments’s BNPL Suite?
With a simple onboarding process at Cashfree Payments and integration with our BNPL Suite, merchants connect with multiple partners. Hence, partnering with us can get you an edge over your competitors by making it easier for your customers to pay you.
Furthermore, we have a best-in-class offering of multiple credit cards and debit cards that further widens the range of affordability options for your customers.
Below are some reasons why Cashfree is your best choice for an affordability payments partner:
- KreditBee, a leading Cardless EMI provider with 6 million+ customers, is an exclusive BNPL partner on Cashfree Payment Gateway
- Native OTP on Freecharge Pay Later: Provide quick and easy checkout to customers and boost your success rate
- Exclusive cashback and discount offers to your customers run by our partners like Simpl, Freecharge, ZestMoney and others on a seasonal basis
In fact, well-known travel and hospitality brands have increased their annual revenue by leveraging Cashfree Payments’s BNPL Suite.
How Ease My Trip Leveraged BNPL To Boost Conversions by 20%
EaseMyTrip wanted to achieve its vision of making premium travel experiences more accessible for Indians. They also wanted to better tap the post-pandemic spurt in travel demand by offering competitive prices to the customers.
But as we mentioned earlier, many prospective Indian travellers get deterred by the high costs of travel.
EaseMyTrip wanted to find a way to increase the value of the travel offerings they were selling by reducing the upfront cost to their customers, without compromising on their revenue.
EaseMyTrip partnered with Cashfree Payments to offer ZestMoney as a payment method at checkout. With a wide range of Travel Now Pay Later and EMI options at checkout, it has been able to increase its conversion rates by 20% and increase the Average Order Value (AOV) from 40% to 60%.
Customers can now have a smooth and simple checkout experience. It enables them to buy a travel package now but pay for it later in easy monthly instalments across 3, 6, 9, or even 12 months at 0% interest.
EaseMyTrip would receive the cost of that travel directly from ZestMoney, making this a mutually beneficial solution for both parties. While it enables customers to Travel Now and Pay Later, EaseMyTrip gets paid the full amount and continues to grow its revenue without interruption.
How ‘Travel/Buy Now Pay Later’ Boosts Your Travel Business
Travel Now Pay Later can enhance accessibility, affordability and overall customer experience.
Let’s discuss this in detail-
- Expanding the Customer Base
With TNPL, customers can make travel plans even if they do not have immediately available money. TNPL services generally do instant e-KYC and credit analysis.
Young millennials and first-time credit borrowers, who are often ineligible for bank loans and credit cards, get access to small-size credit lines. This saves time as well as the complicated process of bank loans.
Moreover, it is easy to use and there are no hidden charges. Unlike credit cards, most TNPL lenders provide no-cost EMI and there is no joining fee. This helps in expanding the overall customer base by making travel more accessible.
Enabling multiple TNPL payment methods in partnership with Cashfree Payments, travel companies offer further flexibility to their customers.
- Higher Conversions & Less Cart Abandonments
Cart abandonments mean a huge revenue loss to the business. Most cart abandonments happen because of high costs, especially when they are additional ones like taxes, transaction fees, etc.
With Travel Now Pay Later, customers can find a solution to their affordability problems. Although the total costs of a trip would remain the same, smaller instalments make it look less expensive and within the budget of the customer.
Therefore, cart abandonments will lessen leading to higher conversions and more revenue for the company.
- Better Customer Experience
According to Baymard, the average cart abandonment rate is 69.99%. Another big cause of cart abandonments is customers having a poor checkout experience. When customers get multiple modes of payment to choose from, they can make a choice.
Similarly, with multiple TNPL partners, they can compare the credit limit, EMIs, repayment duration, etc. They have the freedom to pay with their preferred mode of payment.
A variety of payment methods provides a better customer experience and they are less likely to abandon their carts.
Cashfree Payments provides the widest range of affordability options from credit and debit cards to cardless EMIs and Pay Later options to your customers.
- Higher AOV and CLV
AOV refers to Average Order Value and CLV means Customer Lifetime Value.
The Average Order Value is the average total of all orders placed. When customers cannot pay high upfront costs, they either discard the travel plan or go for less expensive trips. It results in a loss of revenue or lesser order value.
However, with TNPL modes, customers can afford expensive trips as it breaks a high-priced travel plan into small-size instalments. Therefore, with higher purchasing power, they can plan vacations of higher order value.
The Customer Lifetime Value in the marketing world is the income that a business can get from a particular customer. A customer is likely to come back to the site where s/he had a good shopping and checkout experience along with multiple choices of payments.
Therefore, if a travel site has multiple TNPL options for budget-conscious people, it will help in the retention of customers.
Cashfree Payments is a scalable payment platform aiming at smooth-running, time-saving and efficient payment processes for your business. Our BNPL Suite is designed with the same motive to meet your travel and hospitality business needs.
Connect with our experts to know more!
