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Navigating payment challenges in travel: The road ahead in 2025

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Navigating payment challenges in travel: The road ahead in 2025

The travel industry stands at a critical juncture in 2025, grappling with the dual challenges of technological disruption and evolving consumer expectations. A traveller survey by FinMont, a global payment orchestration platform, delves into these issues, uncovering significant gaps in current payment processes and opportunities for transformation. With nearly $1trn in annual airline transactions and billions more across the broader travel sector, the stakes are high.

Travel payment pain points: A consumer perspective

The survey highlights that lengthy, complex payment processes remain a persistent frustration for travellers, particularly among younger demographics.

Key issues include:

  • Limited Payment Options: Nearly 10% of consumers under 34 abandon bookings if mobile payment solutions like Apple Pay or Android Pay are unavailable.
  • Lack of Transparency: Hidden fees and unclear pricing structures frustrate 25% of respondents, leading many to seek more transparent providers.
  • Cumbersome Booking Processes: Over 20% of consumers report that travel bookings are more complicated than retail shopping, further compounding dissatisfaction.

These pain points underline the necessity for travel companies to rethink and streamline their payment ecosystems.

Opportunities in Flexible and Innovative Payment Solutions

Emerging trends like Buy Now, Pay Later (BNPL) offer promising opportunities. The survey reveals that over 10% of travellers would spend more on travel if flexible payment options such as Klarna were available. Similarly, loyalty rewards significantly influence consumer preferences, with 14% of respondents favouring providers that offer robust rewards programmes.

To capitalise on these trends, travel companies must:

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Integrate Popular Payment Methods: Offering mobile-friendly solutions such as Apple Pay is critical for engaging younger travellers.

Embrace Payment Flexibility: BNPL and similar models can unlock new revenue streams by increasing purchasing power.

Enhance Loyalty Programmes: Reward schemes can foster long-term relationships and encourage repeat bookings.

Cost and complexity: The financial stress of payments

The financial burden of payment processing is immense. Airline payment transactions alone cost the industry $20.3bn annually, representing 2.2% of transaction value and 78% of net profits. When factoring in the broader travel sector, the complexity of managing payment systems emerges as a significant issue, cited by 41% of firms in a recent IATA whitepaper.

This complexity impacts sales conversions and shopping cart abandonment, with rates much higher than in other industries. To remain competitive, travel merchants must adopt technologies that reduce dropouts and simplify the payment journey.

The role of technology in transforming payments

Advancements in artificial intelligence (AI), real-time pricing, and payment orchestration are poised to revolutionise travel payments. At FinMont, for example, a unified payment ecosystem connects distribution channels with risk management, FX services, and back-office systems. By leveraging an advanced AI engine, the platform optimises payment routes and methods, decreasing costs and increasing acceptance rates for B2C and B2B transactions.

Such innovations offer travel companies the tools to:

  • Streamline Payments: Simplify processes to align with consumer expectations for seamless transactions.
  • Improve Transparency: Build trust by offering clear, upfront pricing and reducing hidden fees.
  • Enhance Revenue: By minimising dropouts and enabling flexible payment options, companies can boost conversions and customer retention.

Looking ahead: A call to action

In a hyper-competitive market, travel companies cannot afford to lag behind in payment innovation. By addressing pain points, embracing flexibility, and harnessing technology, they can create a frictionless payment experience that not only meets but exceeds consumer expectations.

As the travel industry continues its post-pandemic recovery, payment transformation will be a cornerstone of success. Companies that prioritise seamless, transparent, and efficient payment systems will not only enhance customer satisfaction but also secure their place in a rapidly evolving landscape.

Suby Valluri is CEO of FinMont


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