Guest Post: How diverse payment solutions are playing a role in democratising travel in Asia

 Andrew Smith, senior vice president, supply of Agoda, discusses how to bridge the access gap

Asia is undergoing a resurgence in travel following the pandemic as the fast-growing middle classes embrace the opportunity to explore with relish. The number of international tourist arrivals worldwide surpassed 1.3 billion in 2023, according to Statista's Global Tourism Industry, and a new wave of Asian consumers are entering the market with high disposable incomes and ambitious travel plans.

There are a few factors that are driving the growth of new Asian tourists. For the emerging middle classes in markets like India, price remains a critical factor. Visa relaxation is also supporting greater movement across the region.

Projections indicate that revenue from travel and tourism in Asia will soar to US$326 billion by 2024, with Statista's Travel and Tourism Asia reporting an annual growth rate of 5.36% expected between 2024 and 2028. Travel companies seeking to capitalise on this opportunity need to pay close attention to the intricacies of working within Asia – particularly when it comes to payments. The payments landscape in Asia is complex and varied, meaning that it is too easy to lock people out of the entire travel experience by simply failing to provide the right payment solution. Once considered the last step in the process, payments are now widely acknowledged to be a critical part of the user experience and a powerful tool to unlock growth for travel companies. Nowhere is this truer than within Asia. Unlike many regions in the West, where credit cards reign supreme, Asia is home to a diverse, fragmented payments landscape. Each country has its own preferred payment methods, from the ubiquitous QR code in China to Konbini payments in Japan and PayNow in Singapore. What might be considered alternative payment methods in some parts of the world are the norm across much of Asia. Understanding and adapting to these diverse payment preferences is no longer a nicety – it's a necessity for businesses looking to capture a slice of the soaring Asian travel boom. Imagine the frustration when a consumer tries to book travel on a platform and right at the end when you are ready to pay the consumer realizes that their payment method is not present on the platform. Ensuring a diversity of payment solutions is also playing a key role in ensuring more Asian consumers can book their dream trip easily and conveniently using familiar processes.

The localisation imperative

Asian consumers are fiercely loyal to familiar payment methods – which vary greatly across the region. Take India for example, where 9 out of 10 adults have owned and used a mobile wallet in the past year, with the segment anticipated to grow at a double-digit CAGR between 2023 and 2027. This rapid digital adoption sits in comparison to countries like Japan and Vietnam which are at an earlier stage in the cashless transition. Similarly, while some markets are dominated by one or two digital wallets, others are home to a huge diversity. Indonesia alone has close to 50 licensed e-wallets, a growing economy and a burgeoning travel market. The Agoda platform is home to over 70 ‘alternative’ payment methods, and we plan to expand further to make travel more accessible for all. Travel companies must have an agile approach to payments to ensure

they can meet the expectations of customers across these markets, unlock new customer segments and drive growth.

Bridging the access gap

In 2023, e-wallets emerged as the undisputed champion in Asia Pacific, accounting for 70% of all e-commerce transactions as stated by Deloitte and its Beyond Payments report. This is due, in part, to a large underbanked segment of the population – which represents over 70% of the population in Southeast Asia, according to The Future of Southeast Asia’s Digital Financial Services report, prpduced by Google, Temasek, and Bain & Company.

The unbanked and underbanked across Asia represent both a challenge and an opportunity. Despite not having access to the full suite of banking services, there is high mobile penetration amongst this segment of the population. These mobile-savvy individuals are increasingly joining the travel wave, and they expect to use their preferred local payment methods to do it. For travel providers to tap into the payment methods of choice, they must navigate a complex web of payment providers and gateways to accept a wide range of payment options. To do it well, it must be seamlessly integrated.

The potential of payment innovation

Asia's diverse payments landscape is a hotbed of innovation, which means that businesses must be adaptable and integrate these new options as they emerge. Take the Buy Now, Pay Later (BNPL) sector for example, which is gaining traction across Asia and offers consumers financial flexibility, especially those who may not qualify for traditional credit cards. Cross-border QR code payments are another exciting development.

Apps like AliPay, WeChat Pay, LINE Pay, and Japan's PayPay not only dominate their domestic markets but also facilitate local QR payments abroad. In May 2024, Agoda integrated PayPay onto its platform, further expanding our reach and catering to Japanese travellers seeking seamless overseas payment options. Since then, the volume of bookings from Japan using PayPay has been significant.

While these innovations are enhancing the travel experience, integrating digital wallets can be a complex task, particularly for smaller travel operators. Online travel platforms can play a role here in enabling businesses to leverage white label solutions that fill this gap, supporting them to expand their services to new consumer segments and geographies.

Our collaboration with JTB Corp for example involved creating websites with advanced functionalities like marketing optimisation, machine learning, and AI capabilities. This not only streamlines the customer experience but also includes features like reducing search and booking inefficiencies and improving response speeds. These partnerships are a win-win for us and our partners; by enhancing collaboration with our B2B partners, we gain valuable insights into consumer preferences.

Travellers expect an exceptional experience, with a seamless, secure and familiar payment process, regardless of where they are paying from. Other conveniences like built-in insurance, and personalised post-purchase loyalty offers are becoming part of the expectation. Emerging technologies like blockchain and cryptocurrencies could potentially also play a role, while mobile wallets look likely to see even greater adoption, offering a secure and convenient payment experience.

As payment innovations show no signs of slowing, the next challenge for the industry will be incorporating legacy systems while ensuring customers are able to pay for their vacation wherever and however they want. Businesses that prioritise payments by offering a variety of localised options, embracing new trends, and remaining adaptable will be best positioned to thrive in the dynamic Asian travel market.