As travel restrictions imposed due the Coronovirus pandemic are getting eased out across the globe, tourism and hospitality industry is witnessing green shoots after a metaphorical drought of two years. People are coming out and making a beeline to reach their favorite destinations. Both domestic and international travels have picked up but be it budget travel or solo backpacking, there are no free lunches anywhere. Rising air fare and inflation have also increased the cost of travel. Travel companies and their payment partners are, hence, offering ‘Buy Now, Pay Later’ travel schemes for tourists to enjoy travelling and pay in easy EMIs. These travel ‘loans’ are attractive to travellers as it makes travelling easy on pocket and give option to enjoy even out-of-budget destinations. The ‘Buy Now, Pay Later’ travel schemes allow them to make payment over a fixed period of time, sometimes even without high interest rates.
What are ‘Buy Now, Pay Later’ travel schemes?
The ‘Buy Now, Pay Later’ travel schemes offer travellers the option to sign in to pay off a travel plan either through a travel website or directly from the loan provider. They can make payments in installments until they completely pay off the amount plus interest, if applicable. These payments can be deducted in an automated way by providing your debit card or bank details. Interest rates depends on the plan or offer from the travel companies or the travel loan provider.
Talking to FE Travel about ‘Buy Now, Pay Later’ travel schemes Himank Tripathi, Industry Veteran in the Hospitality & Tech space said, “The travel industry is witnessing a fast-paced growth as the travel sentiments are very positive where people are keen to travel to their favourite destination without any delay. This is where BNPL(BuyNowPayLater) has emerged as a new trend showing a growth of more than 25% compared to last year. All the key airlines, OTAs and banks have come forward with their aggressive plans in that direction. Mostly driven by International travel, newlyweds and small families are driving this BNPL phenomenon. Furthermore, this BNPL will continue to grow as the outbound traffic from India will surpass $42 Billion in the next two years.”
How are ‘Buy Now, Pay Later’ travel schemes faring in India?
The ‘Buy Now, Pay Later’ travel schemes are a new fad among globetrotting Indians as it takes care of the financial constraints in visiting luxurious foreign locations. Indian tourists are opting for ‘Buy Now, Pay Later’ travel schemes of loan providers, travel companies and even banks to jet-set to their preferred destination and pay later in easy EMIs. Bharatt Malik, Senior Vice President, Flights, Yatra.com told FE Travel that ‘Buy Now, Pay Later’ travel schemes are gaining momentum in the country as they provide a convenient option to travelers who would like to visit their dream destination while avoiding any financial crunch. As of now, we have been receiving a positive response from consumers as it makes for an affordable and accessible option for all.
According to the company data, Yatra.com witnessed a spike in queries by 25-27% for vacation loans on air travel as compared to the previous quarter. While the average transaction size of the loan for domestic destinations is INR 14,000 – 15,000, people can also avail of a loan of INR 65,000 – 70,000 on their trip to international destinations. “The flexibility of the BNPL option is helping consumers to act on their pent-up travel desire as people can pay back the money in three to six equal interest-free installments. To make it easier for our consumers to avail of this credit, Yatra.com has partnered with various banking partners like HSBC Bank and HDFC Bank and fintech partners such as OneCard, Zest Money, and Bajaj Finserv. We are optimistic that this emerging trend of travel loans will encourage people to step out and fulfill their travel bucket lists while providing a significant boost to the industry,” Yatra.com’s Malik told FE Travel.
Anup Agrawal, Business Head, LazyPay said that they are also witnessing a similar trend. “We are witnessing an uptick in use of Buy Now Pay Later (BNPL) for travel on our platform, as Indians increasingly adopt the convenient and affordable payment option to book their travel. There is an increase of 13% on amount transacted per day through travel merchants on LazyPay for August as compared to July. The surge in demand for Pay Later solutions for travel represents an evolving consumer preference for hassle-free and quick payment solution that compliments and enhances a consumer’s overall travel experience. BNPL today has also become an important financing instrument, especially for young consumers, who may not have access to credit cards and would want to meet their travel expenses, especially for last-minute plans on occasions such as long weekends,” Agrawal said.
For MakeMyTrip as well, the ‘Buy Now, Pay Later’ travel scheme has emerged as the fastest growing payment option over the past few years. On TripMoney, the fintech arm of MakeMyTrip, that also powers our BNPL offering has seen a 4X growth within this segment in the last two years. Today, travellers actively consider and opt for this payment method for flights,train and hotels bookings, and for all travel purposes including leisure and pilgrimage. “Our BNPL facility starts from Rs. 500 – wherein 75% of the users opt for no cost short term credit (up to a tenure of three months) while the rest prefer a longer tenure. To power our BNPL offering, we work with leading banks and NBFCs including HDFC, IDFC, Capital float, Kissht amongst others,” a spokesperson at MakeMyTrip told FE Travel.
Indians look for value for money in all walks of life, be it travel or shopping for goods. ‘Buy Now, Pay Later’ schemes are giving them options to explore the world without putting too much stress on their savings.