Travel financing has become a highly sought-after payment alternative for consumers and travel businesses. A recent survey suggests that 87% of customers who used travel financing said they would not have completed their purchase without it. The same survey indicates that 40% of customers who used point-of-sale financing spent more on their trip than intended.
A similar survey by Expedia further corroborates this stance - customers who used consumer financing options to book their travel spent 41% more on average than those who did not. The survey also found that offering financing options led to a 20% increase in conversion rates for travel bookings.
To help you dive into the concept of POS financing and reap its benefits for your travel and hospitality business, let us discuss:
- Understanding travel financing at point-of-sale
- The advantages of offering point-of-sale travel financing
- A Checklist for Companies to Choose the Right Fintech Partner
Let’s dive into each and understand how travel businesses can leverage POS financing to maximize profitability.
Understanding Travel Financing at Point-of-Sale
Travel financing is a way for merchants to offer pay-over-time financing to their customers at the point of sale, typically during the booking process for a trip.
Customers can apply for financing and receive a decision in real-time, allowing them to complete their purchase instantly. This alleviates their immediate financial burden while booking flights, accommodations, or travel packages.
Travel and hospitality businesses can partner with fintech enablers, like Skeps, that equip them with the ability to offer their customers multiple ways of financing a travel purchase.
As per a recent report by Travelport, 56% of customers expressed their inclination toward financing options for travel, and 26% reported being more likely to book with a travel company that offers financing options. So, alternative payment options like this can be a win-win for both merchants and customers.
Merchants can amplify their sales and revenue by leveraging travel financing to make their products and services more affordable/accessible to a broader audience.
As for customers, POS financing makes for a flexible solution, especially if they do not have the funds for an upfront payment or are planning a trip ahead of time.
Advantages of Offering Point-of-Sale Travel Financing
For a travel and hospitality business, providing customers with the convenience of consumer financing can be beneficial in several ways. A key benefit is that it can boost your sales by allowing customers who may not have funds available immediately to make a purchase that they might otherwise delay or forego.
Here are some additional benefits of offering travel financing at the point of sale:
- Higher Booking Value: Travel financing increases the likelihood of customers purchasing more expensive travel packages, consequently increasing your average booking value and revenue.
- Improved Customer Loyalty: POS financing options can substantially enhance your purchase journey and increase customer loyalty. With convenient payment options, customers are more likely to have a positive experience and return to your travel website for future travel needs.
- Competitive Advantage: Offering financing options can help differentiate your travel business from competitors and attract more customers looking for flexible payment options.
- Improved Cash Flow: By partnering with a financing provider, travel companies can receive payment for bookings upfront while customers repay the credit over time. This can streamline the cash flow for your business.
Taking these advantages into account, it is apparent that offering financing impacts conversion rates by facilitating and expediting the completion of the booking process.
A Checklist for Companies to Choose the Right Fintech Partner
Choosing the right fintech partner can be pivotal to the growth and sustainability of your business. Use the checklist below to make an informed decision:
- Ease of Integration: Check if your fintech partner can easily integrate with your travel booking system. Ensure that they offer a seamless financing process for your customers.
- Flexibility: Choose a fintech partner that offers a range of customizable financing options to meet your customer's needs.
- Security: Ensure that your fintech partner has a secure, reliable, and robust platform that complies with industry standards for data security.
- Regulatory Compliance: Check if your fintech partner complies with relevant regulations, including consumer finance laws, data privacy laws, and anti-money laundering regulations.
- Interest Rates and Fees: Review the interest rates and fees your fintech partner charges to ensure they are competitive and reasonable. Evaluate the details of the financing terms, including any late payment fees or prepayment penalties.
- Industry Experience: Choose a fintech partner with a proven track record of success in the travel industry. They should have experience working with travel businesses of your size and type.
- Approval Speed: Choosing a fintech partner with an expedient approval process, like Skeps, can enhance your website's customer experience. With an innovative simultaneous lender matching approach, Skeps can check applications with a broad network of lenders simultaneously, providing the best offers to customers with near-instant decisions.
Leverage Travel Financing with Skeps
Skeps offers a state-of-the-art omnichannel POS financing platform that allows partners to white label and provides the widest variety of financing options. Working with a broad network of established lenders, we go beyond one-click payment, also offering a one-click application process for the diverse types of consumer financing options available, including:
- Installment loans
- Co-branded credit cards
- Promotional financing offers
If you’re looking to partner with a forward-thinking fintech company that will keep consumers' eyes on the purchase while offering best-in-class financing, Skeps is the perfect fit.