With PayPal reporting in early August that buy now, pay later (BNPL) usage surged 226% in the second quarter, it’s a strong indicator that installment credit is helping fuel a travel bump this year that’s maintained momentum despite inflation, and keeps branching out into new areas.
It’s been trending for over a year, but pent-up travel demand is a driving force.
“Vacation is at the very top of consumers’ BNPL wish lists,” “The Next BNPL Horizon: Expanding Access To High-Value Services,” a PYMNTS and Amazon Web Services collaboration, found, “with 28% of all consumers saying they are ‘very’ or ‘extremely’ interested in making vacation- and travel-related BNPL purchases.”
Read the study: The Next BNPL Horizon: Expanding Access To High-Value Services
Among many BNPL brands that have pacts with airlines and hospitality brands, Uplift is living up to its name. Having already partnered up with Spirit Air, Southwest Airlines and Tripster, Uplift added cruise to its partner portfolio by taking to the high seas with online travel agency CruiseBound.
In an early August announcement, Uplift said, “This new payment offering provides customers the benefit of reserving cruise experiences by spreading the cost over easy monthly payments. Additionally, through Uplift’s pay-over-time option, customers can easily upgrade to a larger cabin class, add on-board amenities or shore excursions for only a few extra dollars a month.”
Also in early August, travel BNPL specialist Fly Now Pay Later (FNPL) announced a partnership with myvoicetravel.com which bills itself as “the world’s first voice travel assistant.” The new feature lets U.S. passengers booking flights using Amazon Alexa split their payments over 12 months when they say “Book” now and check out on MyVoiceTravel’s website.
“Payment flexibility is playing a key role as it provides consumers with lower upfront costs,” Fly Now Pay Later CEO Jasper Dykes said in the announcement. “It’s not only substantially increasing conversion rates for travel merchants but we’re seeing it driving increased travel frequency too. There are millions of people globally who need a frictionless way to finance their flights.”
Installments Expand Across Travel Sector
In its Consumer Travel Spend Habits 2022 report, travel technology firm Amadeus said that 75% of travelers surveyed said they were more apt in 2022 than in prior years to pay for a travel experience in installments. The report notes that “research from travel specialist analyst house Atmosphere Research found that four in ten travelers it surveyed confirmed BNPL ‘allowed’ them to take their latest trip.”
“Demand for flexible payment options like ‘buy now pay later’ is extraordinarily high,” Amadeus Executive Vice President for Payments David Doctor told news site Travel Weekly. “The industry will need to look for ways that fintech can make travel costs more transparent as well as help travelers manage their spend.”
Among the most recent BNPL pure plays to expand its travel footprint, Affirm partnered with hotel booking platform Agoda in June, offering the payment option to eligible travelers.
Agoda Chief Financial Officer Thi-Mai-Linh Bui said, “The launch of pay-over-time options with Affirm will enable travelers in North America who might have previously found it inconvenient to pay for their booking in one lump sum to spread the costs over multiple payments without incurring any compound interest or additional costs. We’re helping consumers get back out into the world of travel — on their own terms.”
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