Travel and tourism expected to be a key growth driver for global mobile payment industry

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Global mobile payment revenue is expected to grow at a CAGR of over 35% during next five years. Among all other factors, tourism has been contributing significantly towards mobile payment adoption. Travel planning is primarily done through digital channels such as travel review and operator websites and online travel agencies. Close to half of travellers do travel related research on mobile. Travel related mobile payments have not been as extensive as mobile research, but it has been increasing at a steady rate. According to PayNXT360’s latest research travel and transit segment accounts 1-3% of the overall mobile payment transaction value. Mobile booking in travel sales amounted to USD 103 billion in 2014 and constituted 19.3% of entire online travel sales globally. The segment is expected to grow at a CAGR of 27% from 2014 to 2019.

• Asia Pacific – Across key countries in Asia Pacific, mobile payment in the travel segment is growing strongly. Retailers in Japan have embraced smartphone based payment solutions to attract Chinese travellers visiting the country. Chinese mobile payment segment amounted to USD 1.5 trillion in 2015 and QR code scanning for mobile payments at retail location is a popular trend in China. Setup cost for the system is much less than smartcard and chip scanners. Hence small retailers in Japan are increasingly adopting this payment mode to attract foreign consumers. Along similar lines, Tencent aims at introducing WeChat Pay across 10,000 Japanese stores in order to boost travel related customer base and revenue in mobile payment. This would aid in remaining connected to the travellers even after their visit by sending offers and discounts for further online purchases. On similar lines, convenient store operator Lawson is currently offering Alipay at nine locations including Tokyo's Haneda Airport. Alipay is also being offered by FamilyMart at four locations.
• Africa – Mobile payment saw a substantial growth in Africa with users increasing from 52.2 million in 2011 to 105.5 million in 2016. Preference for mobile payments has increased in travel and tourism segment as well, especially in South Africa, Kenya, and Nigeria. Around 28% travellers have reportedly booked travel and hotel reservations directly with the service provider online and 16% have done so via mobile. Kenya has been the leader in this segment due to higher proportion of adult population using mobile money transfer extensively. Hotel booking websites such as Jovago and Jumia are very popular in Kenya.
• North America and Europe – During second quarter of 2016, mobile based travel and transportation bookings made up over 30% of total travel bookings. Online travel agencies are gaining popularity as 60% of last minute bookings are being made through them. However, 30% of last minute hotel bookings were done through smartphones. Leisure travellers use one mobile app during planning while 52% travellers used mobile apps to purchase additional services during travelling. By end of 2016, global mobile travel bookings are expected to rise by 22% and US would be a major contributor to the same.

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