Guest Post: Travel like a local isn’t an aspiration in emerging markets, it’s a requirement

Justo Benetti, SVP Head of Americas of dLocal, explains the behind the scenes

Traveling is often depicted as a glamorous escape, a chance to explore new cultures and experiences. Yet, behind the scenes, the process of booking and paying for travel can be anything but straightforward, especially for those in emerging markets. For many of us, the travel experience begins with a few clicks: visiting a site, choosing a destination, and, if needed, retrieving a credit card to manually input the secret code on the back. It’s a minor inconvenience for some, but for billions in emerging markets, it represents a significant barrier to accessing travel services and a major source of lost revenue for OTAs.

The challenge of payment sytem compatibility

Picture a traveler who has selected their dream destination, only to face a payment system that isn’t tailored to local markets. The issue isn't one of complexity or opacity, but rather that many systems are designed with international credit cards in mind—options more common in developed markets. Without access to these, completing the payment process becomes difficult, limiting the traveler's ability to finalise their booking. Cross-border payments add another layer of difficulty, frequently resulting in high rejection rates due to miscategorised fraud, as many systems fail to accurately identify legitimate transactions in emerging markets. Additionally, travelers often encounter rejections because their local currencies or alternative payment methods aren’t accepted. Currently valued at nearly $12 trillion, the global travel industry sees only 30% of its bookings in Africa conducted online, considerably lower than the global average of 50%. This discrepancy highlights the pressing need for more inclusive payment solutions in emerging markets.

The necessity of local payment solutions

In many emerging markets, the real challenge lies in having their payment methods recognised and accepted globally. For these travelers, paying in their own currency isn’t just a matter of convenience - it’s essential for making travel accessible and affordable. When transactions are conducted in foreign currencies, the costs can quickly become unaffordable or needlessly inflated due to unfavorable exchange rates and additional fees. When local payment methods are not supported, or transactions are declined due to compatibility issues, the dream of exploring new horizons quickly turns into a nightmare of frustration and missed opportunities. Alternative payment methods are changing this landscape, allowing more consumers to participate in the digital economy without the added burden of an emerging market tax. For instance, in Asia, projections show eWallets will grow 311% between 2020 and 2025, highlighting their importance for higher conversion rates. In Latin America, account-to-account (instant payments) are becoming increasingly popular, with financial penetration growing over 71% in 2023.

Impact of declined transactions on travel experiences

The frustration is compounded when travelers face repeated declines and cancellations that jeopardise not just vacations but essential journeys, like traveling for medical procedures, professional opportunities, or educational pursuits. For these travelers, the payment experience is not just an inconvenience - it can directly impact their ability to access opportunities not readily available in their home country. Ensuring that payment processes are seamless and inclusive is not just a luxury but a necessity, especially as the emerging consumer class of billions continues to grow and drive global economic expansion. This demographic’s increasing spending power represents a significant growth opportunity for companies willing to adapt. Studies show that modernising payment technology can reduce a company’s operating costs by 20-30% and, in many cases, halve go-to-market time. For travel companies, these improvements can translate into smoother transactions, a more inclusive customer experience, and access to a rapidly expanding market of eager, capable consumers.

The path forward for global travel accessibility

Emerging market travelers require payment solutions that recognise their unique needs, allowing them to pay effortlessly and securely in their local currencies. They need systems that ensure their payment methods are accepted, and transactions are processed smoothly without fear of declines. To address these challenges, integrating local payment solutions into global platforms is essential. This approach ensures that travelers from emerging markets can book and pay for their trips with the same ease as anyone else. By making it easier for people to pay in their local currency and using alternative payment methods, the travel industry can help more people book trips without the hassle of payment issues. This means fewer declined transactions, less frustration, and a smoother, more affordable travel experience for everyone, whether they’re going on vacation, seeking medical care, or pursuing educational and professional opportunities abroad.

With travel becoming increasingly globalised, the focus must shift from merely accommodating travelers in developed markets to addressing the needs of those in emerging regions. For billions of people, accessing travel as a “local” means having their payment methods accepted and processed smoothly. It’s about ensuring that the promise of travel is within reach, not just for the few but for the many. As we continue to explore new frontiers, it’s crucial to recognise the role that inclusive payment solutions play in making travel truly accessible to all. The journey toward a more inclusive global travel industry begins with understanding and addressing these essential needs.