Airwallex and Skift Research have released a report detailing the state of payments in the travel industry for 2024. The report highlights the challenges faced by travel businesses managing end-to-end payments and financial operations across seven global markets, including Australia, China, Hong Kong, and Singapore.
In Singapore, the report reveals a significant shift in travel customer payment preferences. Nearly 89% of travel executives in Singapore acknowledged that their customers’ payment preferences have changed since the onset of the COVID-19 pandemic. This follows trends seen in Mainland China, which reported the highest shift in payment preferences.
Cross-border transactions have become increasingly common, with 92% of Singaporean travel executives frequently paying suppliers or vendors in foreign currencies. This is the third highest among the markets surveyed, after Australia (95%) and Hong Kong (94%).
The report outlines the main challenges faced by Singaporean travel executives. The top three issues identified were reducing card disputes and chargeback fraud (68%), dealing with foreign exchange volatility (66%), and managing payments to vendors and suppliers in multiple countries (66%). These issues reflect the broader difficulties in handling cross-border financial operations.
More than 84% of travel executives in Singapore reported that challenges with their current payment systems are negatively affecting their profit margins. Meanwhile, 95% of these executives indicated that upgrading payment systems and financial operations technology will be a top priority for their companies over the next 12 months. This figure is the highest among all markets surveyed.
Globally, the research highlighted that 66% of travel companies are seeing their profit margins impacted by outdated or complicated payment systems. About 70% of respondents found that cross-border customer payments have become more challenging due to new payment methods, even though this activity constitutes at least a quarter of their revenues. Upgrading payment technology is therefore a key focus, with 90% of executives planning to prioritise it over the next 12 months.
Jack Zhang, Co-founder and CEO of Airwallex, commented on the findings: “As global travel continues to boom, travel companies increasingly rely on quick and seamless cross-border payments to surpass customer expectations at every touchpoint. However, our latest study shows that slow and outdated payment processes are increasing the cost of moving money internationally, which is eating into their profits—modest at the best of times.”
Rafat Ali, CEO and Founder of Skift, added: “Our survey of global travel executives uncovered new, unique, and even surprising insights into why unified payment and financial systems are critical in meeting today’s traveller expectations. Amid an unprecedented rise in international tourism, the report intends to give travel companies a framework to expand their knowledge base and build more efficient, effective, and profitable businesses through modernised payment and financial operations systems.”
The report provided key findings related to the shift in payment preferences, with credit cards, debit cards, and digital wallets remaining predominant. However, local payment methods and peer-to-peer payment apps are gaining popularity, especially in Asia. Handling a variety of payment types across different markets is becoming increasingly complex for 70% of travel companies.
Cross-border transactions are now a significant revenue source, with 75% of travel companies earning more than a quarter of their revenue from such payments. Nonetheless, these transactions bring substantial challenges, including foreign exchange volatility and the complexity of managing multiple supplier and vendor payments across different countries.
Overall, the findings emphasised that ineffective payment systems are detrimental to profits. Nearly two-thirds of travel finance executives acknowledged that outdated payment systems are directly impacting their efficiency and profit margins, with nine in ten reporting at least a 2% erosion in margins and over one-third losing 10%. Consequently, 90% of travel executives are prioritising upgrades to their payment and financial operations systems, and 80% expressed interest in an all-in-one payment and financial operations platform.
The report offers valuable insights into the financial challenges and opportunities travel businesses face as they expand and operate globally. It also provides recommendations on how online travel businesses can modernise their financial operations for global success.