Payment plans, and other forms of consumer financing, have been growing rapidly in popularity throughout the last few years. Sudden and unpredictable changes in the buying power of consumers have made them value flexibility in their purchases, especially for more expensive ones like travel.
Consumer financing is something that every business can offer, but comprehensive solutions are still relatively new. So, to help business owners catch up on why and how to offer payment plans to customers, we are going to cover:
Let’s dive in to get the bigger picture on hotel and travel payment plans.
Businesses that offer payment plans to customers see an average 20-30% increase in conversion.
Flexible payment makes it easier for more consumers to pull the trigger.
In addition to that increase in conversion, businesses with buy now, pay later (BNPL) options see a 30-50% increase in average ticket size.
When consumers see their buying power increase, they often take the opportunity to upgrade their purchase.
50% of consumers have used a BNPL service.
A growing number of consumers have come to expect BNPL options to be available.
The most common reason consumers use BNPL is to pay for something they couldn’t otherwise afford.
Consumers use financing to cover large purchases that they wouldn’t otherwise make, which means businesses that offer it have access to customers that are not available to those that don’t.
60% of BNPL users say they used it for something unnecessary, like a vacation or a luxury item.
Users of BNPL like leveraging it to treat themselves.
Financing offers the most benefit to companies that understand the payment options that fit their market well. To get the most out of consumer financing programs, we recommend that hotels and travel businesses offer:
BNPL programs function like loans but don’t report to credit bureaus and offer low-to-no-interest. This makes them a low-friction financing option, as the risk to their credit is lower. Also, as long as they break up the bill into 4-or-fewer payments, there is typically no interest. This makes BNPL a terrific option for one-off vacation purchases for travelers that don't take trips often.
Travel credit cards are incredibly popular, and frequent fliers and hotel guests love to use them as their financing tool since it creates an open line of credit they can use and pay off at their leisure. Not only that, but these credit cards also often offer rewards like promotional interest rates, money toward travel, or even free room upgrades for spending money on travel. This makes them a great compliment to BNPL, so the business addresses both one-time travelers and frequent fliers.
Travel loans are a great backup option for consumers that don’t qualify for BNPL programs. Since they have more advantageous terms, BNPL can often be harder to stretch into longer periods (12 months+). Travel loans offer an option that gives the financing company more leverage to guarantee repayment for consumers who need their trip financed into smaller payments over a more extended period.
Skeps offers a comprehensive, end-to-end consumer financing program that helps businesses modernize their entire payment process. We go above and beyond one-click payment, also offering a one-click application process for several different types of consumer financing, including:
If you want to partner with a forward-thinking fintech company that will keep consumers' eyes on the purchase while offering best-in-class financing, Skeps is the perfect fit.
Do you have more questions about how to offer payment plans to customers?
Request a demo or contact us at support@skeps.com!