Is cash in terminal decline? A new free report from EyeforTravel finds that the payment landscape is changing, with a host of new solutions rising in popularity across many key travel markets.
E-wallets, currency cards, peer-to-peer exchanges, and of course credit and debit cards, cash is now having to compete with a host of alternatives looking to be more secure and convenient than the traditional payment method of travellers. From WeChat Pay and Alipay in China, iDeal in the Netherlands, Sweden’s Klarna, and Sadad in Saudi Arabia, e-wallets are soaring in popularity to the extent that cash is used weekly by only 25% of Swedes and the value of e-wallet transactions now runs into the trillions of dollars in China notes the report.
Ovidiu Olea, founder and chief executive of Hong Kong-based fintech start-up Valoot, says Alipay and WeChat Pay are now part of the fabric of commerce in China. “More than just replacing cash, they have successfully replaced plastic as well. They have leapfrogged other parts of the world where there is a move to contactless and instead they have delivered convenience through QR codes,” he says.
The fintech sector is also jumping into the market using low-cost technology infrastructure and operating on razor thin margins. These innovative services are leveraging the mobile revolution to offer payment cards controlled by mobile apps, which allow for a high degree of flexibility in exchanging currencies. As Ian Strafford Taylor, chief executive of currency card company FairFX, says: “The pre-paid card market began to take off when consumers started to realize that high street banks were offering them a bad deal on exchange rates and fees for spending and withdrawing cash abroad. Debit and credit cards may be an easy option to default to, but the hidden fees soon start to pile up over the course of a holiday.”
Proliferation in cash alternatives is causing some in the industry to believe that the days of cash are numbered. “Cash is in demise,” says Alex Fitzpatrick, head of global payments at travel commerce company Travelport. “We will be a cashless society eventually,” she adds. In her opinion governments want to move payments to a digital platform to increase oversight and transparency. Businesses would also prefer to do without cash.
However, for Thomas Helldorff, Worldpay’s vice president for vertical growth in airlines and travel, “Cash will still be a relevant factor when people go abroad and pay,” as catering “for every traveler from every country you would have to integrate every single form of payment out there. Not a lot of them have, so far, managed to get global reach. It has taken the likes of Visa and Mastercard decades to get there.”
The report finds that although consumers in some countries are highly engaged in the digital revolution sweeping payments, there is strong divergence between markets. In Germany and Austria for example, a strong preference for cash remains, with Germans carrying the most cash on average among European consumers. They also prefer to pay using bank transfer when shopping online and shy away from credit cards in comparison to Italy, for example, demonstrating that even within the EU there is a high degree of variation. Localisation needs to extend beyond language and cultural elements to payment methods for travel brands.
Therefore, cash is a long way from finished but the travel industry will need to pay far more attention to the alternatives which are rising in markets around the world.
Download this free report now to understand how payments are diverging and how you can take advantage of the new environment as a travel brand through detailed analysis alongside insights from:
- Daniel Greaves | Senior Manager, Marketing, Payments | Amadeus IT
- David Nunn | Head of Braintree Europe
- Richard Cole | Chief Marketing Officer | Caxton FX
- Shachar Bialick | Founder and Chief Executive | Curve
- Jorge Rodriguez | Marketing and E-commerce Manager | easyHotel
- Edward Chandler | CCO | eNett International
- Peter Quinn | Payments and Revenue Systems Lead | Eurostar
- Ian Strafford Taylor | Chief Executive | FairFX
- Paul Van Alfen | Global Head of Airlines and Travel | Ingenico ePayment
- Anouska Ladds | European Head of Airlines, Hotels and OTAs | Mastercard
- Ben Jackson | Director of Mercator Advisory Group’s Pre-paid Advisory | Mercator Advisory Group
- Alex Fitzpatrick | Head of Global Payments | Travelport
- Ovidiu Olea | Founder and Chief Executive | Valoot
- Thomas Helldorf | VP for Airlines and Travel | Worldpay