Save now, and pay your flight installment payments later
Buy now, pay later has been a breakthrough trend in payments over the last few years- primarily online via eCommerce methods, allowing people to spread the cost of their purchases into more manageable payments.
However, Buy Now Pay Later can have serious ramifications for customers and merchants, with a report from citizens advice detailing how:
1 in 10 BNPL users have been chased by debt collectors in the last year.
1 in 3 BNPL users have missed a payment or made a late payment in the last year.
However, for the travel industry specifically, a Mastercard Payment Report stated that the average card failure rate is 12%, with the rate of this being due to insufficient funds at 36%. By breaking high-ticket items and services into smaller payments with Buy Now Pay Later, businesses reduce these failed payments and collect higher revenues over time through incentivising customers to make higher ATV bookings. e. In fact, Buy Now Pay Later has been shown to increase conversions by 20% and average checkout value by 60%.
However, the problem that we see taking shape is that the benefits of the incremental revenue that is brought in by offering installment payments via Buy Now Pay later can be offset by late payments and debt incurred by the customer. This means debt collection agencies must get involved- only dragging the process out further. Buy Now Pay Later can also be highly expensive for the airline industry, which operates on very thin margins.
The solution? An alternative way of looking at paying in installments.
Save now, pay later with Hands In installment payments.
How do Hands In flight installment payments work?
This split payment option is seamlessly integrated into checkout, where the customer follows a payment plan for their flights with interest-free payments. Once they pay a deposit, this plan is initiated between the merchant and the customer- whether these are weekly, bi-weekly, or monthly payments (at the merchant’s discretion).
Crucially, customers don’t get their flight tickets until the full balance is paid, meaning it's a win-win for Airlines and holds consumers accountable, while providing a better buying experience to suit their needs.
This way, people are saving their way to book their flights, rather than taking on debt to get them instantly. Currently, we are exploring a POC with a number of airlines in Europe and LATAM regions , to capture what would be lost revenue due to insufficient funds for flights.
What are the benefits of flight installment payments?
Bringing more revenue to the direct sales channel
OTAs offer installment payments but airlines do not typically, due to their existing ticketing system offering low ticket limits. With airlines offering this, they can provide a convenient way for customers to pay and incentivise more users to book with them directly versus and OTA channel where they lose the margin.
Reduced failed transactions and increased ATV
By breaking up the cost of the flights into smaller payments, there is less financial burden upfront on customers, especially during the cost-of-living crisis where 34% of UK employees are living paycheck-to-paycheck. This will result in less failed payments, where revenues are either lost or directed towards cheaper competitors.
Offering ways to break high-ticket flights into more manageable installment payments leads to higher incremental revenue and more transactions for aviation companies also. This is because their flights are now affordable to more people, where they would not have been attainable previously.
Competitive advantage and user experience
Users will be stickier by offering new ways to pay- especially ones that accommodate for customers’ tight financial situations, without placing them into debt. This will give airlines a significant advantage over competitors who do not offer this flexibility, meaning offering this budget-friendly way to pay is not just a method of increasing revenue, but a strategically-sound marketing decision that creates a new reason to buy.
Flight installment payments are a method of split payments for airlines that allow future passengers to save for their flights, not get into debt for them. With these installment payments, airlines can recover lost revenues, increase transaction volumes, and enhance their transaction experience and retention rate.
If you want to follow in the footsteps of some of the airlines we’re talking to and make flight installment payments part of your customers’ buying experience, book a demo here.