Key Takeaways
- Post-summer travel continues to surge, with consumers seeking alternative payment methods.
- Buy Now, Pay Later (BNPL) is favored, especially among younger consumers, offering flexibility in trip expenses.
- BNPL is increasingly offered in “everyday spend,” benefiting remote workers and those on extended trips.
- The digital payment era presents opportunities for merchants to enhance consumer loyalty through targeted strategies.
Jacqueline White of i2c and Ray Chalub of Inter & Co. highlight a significant momentum in post-Memorial Day travel.
However, as inflation worries consumers, there’s a shift towards alternative payment methods, including BNPL.
These options let consumers manage travel expenses while maximizing their available cash.
Merchants and providers further support this by allowing staggered payments for various services.
Evolving Travel Desires
Post-pandemic, there’s a noticeable “travel snapback” as individuals are keen to explore again.
This sentiment is particularly strong among younger consumers, including millennials and Gen Z, who prioritize their financial health.
According to a PYMNTS report, research reveals that 30% of millennials and 29% of Gen Z planned to use BNPL for summer travel, starkly contrasting to the 5% of older generations.
Chalub notes that globally, these trends persist despite inflation.
BNPL finds strong adoption in countries like Brazil and is gaining traction in the U.S., with many favoring installment-based payments.
Millennials possess established credit limits, whereas Gen Z focuses on building credit scores.
Chalub states that BNPL is a budgetary tool, while White adds that younger generations exhibit financial prudence due to economic developments.
BNPL’s Broadening Horizons
Beyond significant expenses, BNPL caters to regular transactions, including meals and additional costs.
Remote work flexibility means longer trips, making staggered payments beneficial.
With the FedNow Service’s introduction, payment methods have evolved rapidly.
White points out that over half of North Americans opt for contactless payments, prioritizing convenience, especially during travels.
Leveraging Loyalty in the Digital Age
White emphasizes the potential of digital payments to bolster consumer loyalty.
Tailored marketing strategies can appeal to specific generations.
The report noted that by harnessing data through AI and machine learning, merchants can seamlessly integrate BNPL with reward systems.
Chalub stresses the significance of understanding consumer needs through available data, positioning it as a crucial success factor.
What Do We Think?
The rise in alternative payment methods, particularly BNPL, indicates a changing landscape in consumer behavior influenced by global economic shifts and technological advancements.
As the travel industry adapts, merchants must capitalize on these trends, ensuring sustained consumer engagement and loyalty.
Learn more in the entire PYMNTS report.
