How Buy Now, Pay Later changed the travel industry


Imagine yourself on the perfect beach, soaking up the sun, away from home and without a care in the world. Maybe you’re staying at a fancy Airbnb a few steps away, maybe you’ve even splurged and flown business class here, and you’ll be doing the same when it’s time to go home. That’s if you ever leave, and why would you? After all, you didn’t pay a penny for the trip. Not yet, anyway.

Frequent online shoppers – which is all of us these days, it seems – will most likely have a passing familiarity with the growing number of ways to pay the bill, or not pay, At least not for the moment ; third-party services like Klarna, Afterpay, Affirm, and Uplift are all fighting for the opportunity to offer you a small (or sometimes not-so-small) personal loan to buy everything from that office outfit to the bedroom set. sleep of your dreams,

After years of kicking tires and right after the biggest lasting setback the travel industry has ever seen, Buy Now Pay Later, as it’s popularly known, wants to change the way you book your next trip. Suddenly, it seems like all the major providers, especially third-party booking engines like Priceline and Expedia, are happy to give travelers the option to pay in sometimes tiny installments. Some – PayPal Credit, for example, now an option for all Airbnb bookings – give you a generous promotional funding period that could allow you to do your entire trip without opening your wallet once, all without paying a dime. ‘interest.

Booking a trip has never been easier or more flexible – no need to check your balances before planning and executing your trip, no need to worry about cash or spending your last penny before the next one pay day taxi to airport.

Of course, as long as Americans travel for business, there are workarounds for those looking to avoid paying their tab up front — package tours, cruises, and so on. have all been traditionally secured with a deposit, with a balance due before your travel date. Buy now, pay later can ease that pressure in an almost unprecedented way. Apply for a loan at the cash desk, receive your answer in seconds, all without damaging your credit; some automatically structure payouts for you, others offer flexibility that’s almost too good to be true.

Welcome to the future, that’s how we travel now. But for how long ?

“We’re a credit-hungry society, we like the ability to use other people’s money and then pay them back, even if it will cost more later,” says Bay Area manager Henry Harteveldt. Atmospheric researchwho surveyed recent travelers on the topic, just over four in 10 said the ability to use Buy Now, Pay Later helped them make the trip.

This is a “small but significant number,” Harteveldt says, and a number that is likely to grow as inflation and demand drive airfares, rental cars and, in many cases , increasingly high hotel stays; in March, a study conducted by Qualtrics for Credit Karma showed that nearly 60% of consumers were more likely to use Buy Now, Pay Later due to inflation; almost half of those surveyed considered it a good option in times of financial difficulty.

“The travel industry is always supportive or receptive to a payment method that gets more people to click the buy button, which doesn’t really affect their cost of sale, or their margin, or may even incentivize people to spend more, for example, if it means someone could pay a little more for a plane ticket, or add a few optional products, or add a day to a hotel stay, or upgrade their accommodation , it helps the seller improve their business, they’re going to be all for it,” Harteveldt says. “They know the security around the transaction is okay; some of these companies have been in business for more than three or four years, so at this point it’s proven.

“There is no risk for the airlines, the third-party services bear all the risk,” says Brett Snyder, founder of grumpy flyer, a popular industry blog. “It certainly has the ability to open up more travel opportunities for those who don’t have the money to pay for travel directly. This is particularly good news for low-cost operators who tend to cater more to those on a tighter budget. »

How long will the party last? The Qualtrics/Credit Karma survey found that over 60% of Americans have used Buy Now, Pay Later, and are using it more and more; of those, 20% admitted to missing at least one payment, and 33% of those struggling to keep up had seen their credit score drop. And while some require reimbursement from a bank account or debit card, others accept credit cards, plunging consumers into a deeper and deeper debt hole.

“Every time I go to book a plane ticket now, I’m offered to buy now, pay later,” says consumer expert Clark Howard, host of the Clark Howard Podcast, and an outspoken skeptic about the change in travel booking habits – a change he notes is exceptionally popular with younger travellers. “The reason it works so well, the reason more than half of Americans have used it, is that it makes you feel like you can afford it. It’s the perfect example Consumer Psychology People want the green light to spend money when they know they shouldn’t.

And if travelers are getting carried away now, wait until things get tighter – it’s a safe bet that the every man for himself situation won’t last – think back to the early days of Uber, when you could zip through Los Angeles for $6, compared to what you are paying now.

“It’s land grabbing: attract customers,” says Cranky Flyer’s Snyder.

“One of the things I’m going to watch is as interest rates go up, if they start to go up, how much are the Buy Now, Pay Later organizations going to absorb, and how much will be passed on to the consumer, and how many people will just explore other methods,” says Harteveldt. the fine print before accepting the transaction.” What is very important for someone to understand the real cost of using this payment method: does he understand the number of payments he is obligated to perform and what will be the total price?”

It’s not that urgent caution is likely to stop many travelers in their tracks, not this summer, at least.

“After two years of restricted life, everyone wants to do everything, everything at once – I’m in airports all the time now, the queues are crazy. There’s a pent-up demand and they don’t want to be told no,” says Howard.


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