Digital payments – the passport to a post-COVID future
By Shaun Puckrin, Chief Product Officer at Global Processing Services
As the global economy starts to re-open, crucial sectors such as retail and hospitality are showing positive signs of growth. The travel industry has yet to get back on its feet, however, hampered by changing restrictions and concerns over emergent COVID strains. As mass immunisation and vaccine passports kickstart consumers’ holiday plans, it’s imperative that banks and FS providers understand how the pandemic has accelerated shifts in the ways people manage and spend their money to prepare for a cashless travel sector in the future.
Only by understanding these changes will they be able to deliver better, more efficient financial services, such as mobile FX and multi-currency wallets, for travellers that are readily embracing a digital-first mind-set.
Cashless payments on the rise
COVID restrictions have led to widespread adoption of digital financial services domestically, with 76% of the UK’s population now using an online banking app. The payments space has seen similar change; contactless transactions totalled £12 billion in revenue last year, an increase of 65% YoY.
As a result, consumers expect their providers to deliver responsive mobile platforms to manage their money, where payments and transactions can be made instantly from their smartphone. With consumers so readily adopting digital solutions domestically, it stands to reason that these expectations will remain as international travel resumes.
Mobile ticketing takes off
Digital ticketing solutions and contactless payments have long been available on most forms of public transport, from local bus operators to international airlines. As travel guidelines have changed, however, and consumer fears around public transport have increases, operators have had to adapt to survive, championing these options over traditional cash payments.
Furthermore, it’s likely we’ll see these changes take hold at a more macro level, as consumers become more used to digital ticketing and electronic forms of identification. Research from the World Travel & Tourism Council, for example, shows that nearly half of consumers (45%) would prefer a digital passport over their current physical document. Recent announcements, such as the EU signalling its plans to implement a digital ID ‘wallet’ by October 2022, and news of international vaccine passport pilots, will further drive the move towards digital identification.
Workcations and Bleisure - the future of travel?
With 33% of workers now expecting to work remotely between one and five days a week, employers are fast having to adapt to the concept of the ‘borderless office’. This flexibility has given rise to the ‘workcation’, where travellers will either log on remotely from their accommodation or tag additional leisure days onto their business trips. This change can already be seen in travellers’ booking habits, with statistics indicating that the length of stays in hotels has increased from 3.5 to 9.5 days on average.
“Bleisure travel” - the trend towards remote work holidays - is increasingly rapidly, and the industry is already responding with packages combining luxurious working spaces and reliable internet connections with more traditional holiday offerings. As the lines between business and leisure in travel continue to blur, financial services providers will have to offer a borderless payments services to meet the needs of increasingly international customers.
The cash conundrum
Although consumers are readily embracing digital transactions methods at home, cash still remains the dominant go-to payment method globally, with an estimated $18 trillion being spent in cash last year. When it comes to tourism, however, the traditional cash-based model of physical currency exchange is ripe for disruption, being both time consuming and expensive for those traveling abroad. Studies suggest that travellers from the UK can have as much as £90 in spare currency following a holiday before they’d consider converting it back to GBP. This means that, collectively, UK travellers could be sitting on over £3.5 billion of spare change.
Banks can save their customers time and inconvenience by investing in better mobile wallet solutions, helping travellers to manage their holiday spending and currency conversion more efficiently and affordably.
The mobile-first future of travel payments
Mobile FX and multi-currency wallets can help FS providers tap into the changing needs of international customers. From the ability to buy, sell and store multiple currencies digitally, to the real-time view of spending patterns, customers can benefit from better rates and enhanced money management solutions when spending abroad. As the smartphone continues to be a cornerstone of the travel experience, financial services ‘on-the-go’ will become a natural part of the journey, with mobile wallets sitting alongside the likes of navigation apps and translation services on the user’s smart device.
As mobile FX offerings empower customers to better manage their money abroad, they also open up a new revenue stream for banks in the form of competitive conversion rates. In addition, reports suggest that financial services providers that offer a multi-currency platform see more widespread domestic usage; 80%[ii] of card holders who use their digital bank card abroad are more likely to use it when spending domestically, with a 38%[iii] increase in spending on average.
The passport to post-COVID travel
Pivoting to introduce mobile FX solutions will allow banks to deepen relationships with their customers, but launching a new offering alone isn’t easy. Being agile enough to tap into this growing market appetite will require FS providers to partner with the right specialists. Global Processing Services has built long-standing relationships with cross-border transaction experts, such as Currencycloud, which allows us to offer a full stack platform incorporating both mobile FX and point of sale (POS) FX, allowing banks to offer the efficient, responsive digital services customers expect post COVID.
The result is a forward-thinking solution that can support FX transactions at weekends, display real-time exchange rates at POS systems and incorporate ewallets that support multiple currencies. By investing in these platforms now, banks can help their customers prepare for a digital-first travel future, and unlock new ways to service consumers as they spend and manage their finances, both domestically and abroad.