Travel companies are slow to invest in payment innovation despite demand from consumers for wider options.
Research published by Amadeus, carried out by Pymnts, reveals that only 15% of travel companies implemented a payments innovation in the past three years.
Barriers to innovation cited by travel companies include the complexity of processing payments, handling new payment methods and the cost of payments.
According to the study, retail travel agencies spend 7.5% of revenue on payments while airlines spend 4.2% and hotels spend 4.5%. On average, travel companies spend about 6.2% on payments.
Consumer demand was seen as the biggest driver to invest in new payment options at 91% followed by loss of customers at 83%.
Many companies are planning to start payment innovation with 14% saying they plan to “initiate a lot of innovation” and 81% saying “some.”
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Within the online travel agency segment, 100% say they are planning payment innovation.
According to the report, OTAs currently offer about six payment options on average with all offering web payment. In addition, the OTA category is twice as likely to offer payment via chat platforms.
However, often innovation development hit the rails with 78% citing consumer data security as the main reason followed by 77% saying credit card data security, 64% saying fraud losses and 49% saying the complexity of existing systems.
That said, the majority of companies believe the revenue gained by innovation in payment systems will outweigh the cost. Almost a quarter, 24%, say revenue outweighs the cost and 36% say innovation will bring their costs down.
In addition, larger companies see greater financial gains from payment innovation.
The report concludes overall that the industry is approaching a “payments innovation tipping point” with most travel companies acknowledging the need to implement new systems to keep up with consumer demand as well as moves from competitors.