Amidst several headwinds, BNPL sees considerable growth potential in the travel and hospitality sector

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As buy now, pay later (BNPL) model extends beyond its focus on consumer goods; instalment-based financing is seen to find its way into different sectors and industries. Interestingly, travel captured the top spot in consumers’ spending priorities among the non-essential items, and consumers are most willing to fund their expenses through instalment payment options. Consequently, several BNPL firms are capitalizing on this trend to diversify their revenue streams.

Notably, the appetite for luxury travel is huge, especially amongst the millennials and Gen Z. Among high-end hotels, Versace Dubai was the first to start offering payments in instalments. In Asia Pacific region, Shangri-La Hotels and Resorts became the first to sign a partnership agreement with Singapore-based Pace to offer BNPL schemes in its hotels in Malaysia. 

Amid current economic uncertainty also, BNPL firms are adopting several strategies to rebound in the travel sector by offering different payment options, thus, transforming the holiday booking process and making it much more simplified. For instance,

• In August 2022, Cashew Payments, a UAE-based buy now, pay later (BNPL) provider, entered into a partnership with Sandy Beach Hotel & Resort in Fujairah, to provide the customers the flexibility and financial opportunity to pay in instalments during their staycation. Though this is not the first partnership of this kind, however, it is the first time the BNPL provider is tapping into the hotel industry. In order to diversify its business, the fintech firm has expanded into different verticals and now entered the travel and tourism sector seeing high growth potential. 

This new offering came after the firm’s realization that a significant number of residents staying in the UAE were looking for staycation options without paying the hotel price upfront. Therefore, Cashew Payments expanded its lending option for the residents of the country through interest-free BNPL loans, with options to repay in three, six or twelve instalments. 

Notably, the firm is also building strategies to expand into niche industries such as furniture, education and healthcare to capture more market share in the country. With more than 50% BNPL penetration, PayNXT360 expects this new offering to see high adoption amongst the customers in the country.

• In March 2022, BNPL firm, Atome, announced to partner with the digital travel platform, Agoda, to provide more flexible payment options for the residents of the Philippines. Under this partnership, Philippines travellers will be able to pay for their domestic travel accommodations in three instalment payments. Previously, both the firms had partnered to serve other markets such as Singapore, Malaysia, Hong Kong, Thailand and Indonesia. Now, this partnership would help in boosting domestic tourism by providing Agoda customers with payment flexibility as they book their domestic travels.
• In July 2022, an India-based travel fintech and BNPL aggregator, SanKash, revealed that it is aiming to acquire 1 million customers by 2025. This fintech firm launched BNPL services on its platform after the realization of the massive gap between travel experiences and on-time availability of money. The ‘Save and Spend mode’ feature of the platform, which allows the user to spread out the payment in instalments, has been witnessing an uptick over the last few quarters. While most banks do not lend for travel, SanKash is making travel more accessible and affordable for the customers by offering pay-over-time payment choices. Moreover, it also acts as the focal point for both merchants and BNPL providers to offer and avail Travel-Now-Pay Later option to their customers. SanKash, which uses an AI-powered logical engine at the time of payment & point of purchase, aims to increase partner productivity by 5X and double monthly activation rate plans, serving around one million customers by 2025.
• Another United Kingdom-based travel fintech firm, Fly Now Pay Later (FNPL), raised a US$75 million debt funding package from Atalaya Capital in January 2022. The firm will use this capital to expand into the world’s largest travel market, the United States. Notably, FNPL allows the user to spread the cost of a trip over 12 monthly instalments through the travel agents such as Malaysia Airlines, HotelsOne, TravelUp, Air Serbia and Azores Airlines. Also, the firm allows customers to access flexible financing options through its app.
• Other BNPL providers, such as Uni and LazyPay, also observed travel emerging as one of the top priority sectors for customer spending. Uni, which is the newest BNPL player in the Indian market has partnered with travel merchants such as ClearTrip, EaseMyTrip, Indigo, Goibibo, and Paytm. Under the partnership, the BNPL provider allows the user to pay via Uni Pay 1/3rd card to book tickets, stay, and pay for food and other expenses during their travel.

With the shift in the consumer’s expectations, BNPL providers are revolutionizing the travel experience through alternative and easy digital payment solutions. Therefore, more fintech firms are expected to see growth, prioritizing the needs of the customers through a seamless and flexible payment experience, making travel more accessible and empowering for the consumers.

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