How can digital payments help travel rebound?
The COVID-19 pandemic has hit few industries harder than international travel.
New restrictions on movement and subdued confidence among travellers suppressed global international tourist arrivals by 72% between January and October 2020, according to the UN World Tourism Organization (UNWTO)1. That represents 900 million fewer international tourist arrivals compared to the same period in 2019.
As the virus has ebbed, flowed and resurged in different parts of the world, its impact on air travel has also varied. Domestic flights have outperformed, unhindered by the complexity of differing virus containment strategies, and arrivals in China, for example, have already surpassed pre-pandemic levels.2 In Europe, consistent alterations in quarantine requirements have put the intra-regional air travel market further behind in the recovery, and the UNWTO doesn’t expect the rebound in European tourism to begin meaningfully until the third quarter of 2021.
Battling to survive
As the pandemic’s impact on the industry unfolded, two immediate concerns came to light: cashflow and fraud. The industry battled to maintain cashflows amid a surge in requests for refunds. Airlines sought to mitigate that pressure by introducing voucher schemes enabling customers to book flights in the future. In some instances, airlines and travel agents took a long time to process the high volume of customer refunds.
Fraud remains a problem despite the decline in sales, and common types of fraud have picked up alongside entirely new challenges, including instances of ‘double dipping’ by some customers who both requested a refund and initiated a chargeback for the same transaction. Furthermore, travel merchants in the EEA & UK will need to ensure online transactions can be processed in a way that is compliant with Strong Customer Authentication regulatory requirements. This will have various implications depending on whether the payment is on their own digital channel or through an intermediary or third party.