5 Benefits of Buy Now, Pay Later for Tour and Activity Providers

5 Benefits of Buy Now, Pay Later for Tour and Activity Providers

Nowadays, when you shop online, you will likely be offered the chance to split your purchase into a series of installments without the need to use a credit card or apply for a loan.

Buy Now, Pay Later services have profoundly changed our spending habits, and there’s no going back. According to Juniper Research, as of 2022, there are over 360 million BNPL users across the globe, and the number is poised to grow exponentially over the next few years.

From a business perspective, I’m sure you have plenty of questions about this emerging trend. For example, how does Buy Now, Pay Later work? What are the main benefits of this type of financing for tour and activity providers? More importantly, what do you need to do to be able to accept BNPL payments? In this article, I will clarify all your doubts regarding the topic.

What is Buy Now, Pay Later?

Buy Now, Pay Later empowers customers to divide a purchase into multiple installments, with the first installment usually due at checkout. BNPL services are a ubiquitous presence on the web, especially after the surge of online shopping driven by the Covid-19 pandemic, and most people associate these services with shopping online, but in fact, you can also use many of them in physical stores.

How does Buy Now, Pay Later work?

Each Buy Now, Pay Later service offers unique perks, but essentially — at least from the perspective of the end user — they all work in the same way:

  1. When shopping at a participating retailer (both online and in-store), customers can opt for BNPL at checkout.
  2. They will need to fill out a form by providing their personal information and a valid payment method (usually a debit or a credit card).
  3. The BNPL provider quickly evaluates the request; users will receive confirmation in a few seconds.
  4. The purchase will be split into a series of equal installments, the first of which is due at checkout. Usually, small purchases can be divided into interest-free payments.

5 Benefits of Buy Now, Pay Later for Tour and Activity Providers

What are the leading Buy Now, Pay Later services?

In Europe, the most influential players in this industry are Klarna and PayPal.

Klarna is a Swedish fintech company founded in 2005 by Sebastian Siemiatkowski, Niklas Adalberth, and Victor Jacobsson. Today, it’s a multination conglomerate with more than 4,000 employees located all over the world, from Australia to the United States.

PayPal is one of the first and most renowned payment processors for online transactions. The company currently ranks 143rd in the 2022 Fortune 500, an annual list of the largest United States corporations by revenue.

Klarna and PayPal allow customers to split a purchase into three interest-free installments with no set-up fees or additional charges. The first payment is made at checkout, while the remaining ones occur on the same date during the next two months. For instance, if you buy a 90€ item on October 15 using a BNPL service, you’ll have to pay 30€ at the point of purchase, while the same amount will be automatically charged to your payment method on November 15 and December 15.

PayPal “Pay in 3” can be used on purchases ranging from 30€ to 2,000€. On the other hand, there’s no predefined spending limit when using Klarna. That being said, every payment is subject to approval based on factors such as the customer’s payment history and outstanding balance.

Please note that Klarna and PayPal offer different conditions to their users in the United States. Both allow clients to divide purchases into four interest-free, bi-weekly payments. People can also opt for six-, twelve-, or twenty-four-month payment plans, which usually come with interest and fees.

Buy Now, Pay Later trends & statistics

Buy Now, Pay Later has become one of the most noteworthy trends in the retail space over the last couple of years. Below you can find a selection of statistics that can help you better understand the extent of this phenomenon and how you can take advantage of its popularity.

5 Benefits of Buy Now, Pay Later for Tour and Activity Providers

Buy Now, Pay Later for the travel industry: What you should know

The statistics above show how important BNPL is in retail and how this trend will likely grow even more during the next few years. From the customers’ standpoint, it is easy to understand why these services are booming. They give much more flexibility than credit cards while, at the same time, having a much easier approval process and lower (if not nonexistent) interest rates. It’s no secret that customers are more than happy to take advantage of Buy Now, Pay Later when it comes to discretionary spending. To quote the podcaster and consumer expert Clark Howard: “The reason it [BNPL] does so well, the reason more than half of Americans have used it, is that it gives you the perception that you can afford it. It’s the perfect example of consumer psychology. People want the green light to spend money, when they know they shouldn’t.”

BNPL is already having a profound impact on the travel industry. In an Atmosphere Research survey, 40% of those polled declared that using Buy Now, Pay Later made it possible for them to take their latest vacation. Here are some of the most noteworthy news related to the adoption of BNPL in the travel & leisure segment:

  • In November 2022, Trip.com – one of the largest online travel agencies out there – established a series of strategic partnerships to offer its customers in the UK and Pacific Asia the chance to spread out their purchases. With Klarna, Trip.com users in the United Kingdom can split their payments into three installments over 60 days. Atome provides similar options to the users in Singapore, while people living in other Asia Pacific regions will have to wait until 2023.
  • Amadeus – the well-known IT provider for travel and leisure – is collaborating with Uplift and Fly Now Pay Later to integrate a BNPL solution into its Xchange Payment Platform. Thanks to these partnerships, travel agencies, hotels, and airlines can easily offer Buy Now, Pay Later to their customers.
  • Speaking of Amadeus, the tech company has surveyed 4,500 travelers from Germany, France, the UK, the USA, and Singapore regarding their travel plans for 2023. For 42% of them, traveling abroad is the top priority in the “discretionary spending area.” Furthermore, 75% of the respondents claimed they would likely use BNPL to fund said vacations.
  • Delta Air Lines, a leading airline in the United States, is giving owners of an Amex card the option to buy tickets via Plan It, a BNPL service developed by American Express itself.
  • Carla, a car rental app growing progressively popular both in the USA and Europe, has brought BNPL to its clients through a partnership with Affirm.

Benefits of Buy Now, Pay Later for tour and activity providers

Buy Now, Pay Later is already changing the spending habits of most travelers, and it’s easy to understand why customers love this new payment method so much. But what are the benefits for you as a provider of tours and activities? We’ve already spoken about higher conversion rates, but there are plenty of enticing perks in adopting BNPL.

Expanded customer base

Allowing people to divide payments into interest-free installments will help attract people usually priced out by your offers. In particular, you will be able to entice younger customers, given how widespread BNPL is among Zoomers and Millennials.

5 Benefits of Buy Now, Pay Later for Tour and Activity Providers

Improved customer experience

In general, customer satisfaction skyrockets when users are given their preferred options, and that’s particularly true when it comes to payment methods. As you already know, satisfied customers are easier to retain and have a higher lifetime value.

Increased average customer spend

Afterpay, a US fintech company, claims that adopting BNPL empowers merchants to increase the average order value by 18%. Affirm, a competing provider, has declared that the average order value of purchases made via BNPL is 85% higher than the ones paid using other methods.

Reduced cart abandonment rate

According to the latest statistics, the average cart abandonment rate for e-commerce (e.g., the number of initiated transactions that don’t lead to purchase) is around 70%. There are multiple reasons for this phenomenon: some users simply like to do some “window shopping,” while others could have second thoughts regarding the amount they’re spending or can’t find their preferred payment method. According to a Mastercard survey, offering BNPL at checkout can reduce the abandonment rate by up to 35%.

Lower cancellation rates

Users can second-guess their purchase even after completing the payment at checkout, especially when they book a tour or an activity well in advance. In similar cases, they will likely cancel their reservation and ask for a refund. Installment payments make purchases easier on the wallet, reducing the chances of cancellations.

How to accept Buy Now, Pay Later payments

At this point, you’re probably wondering what you need to do to start accepting Buy Now, Pay Later payments. Luckily, the answer is pretty straightforward.

First, you need to integrate a booking system into your website. Booking systems are web applications that let you sell tickets online and manage bookings. The best software in this category is Regiondo, an all-in-one solution for tour and activity providers designed to increase revenue, save time, and reduce operational costs. Regiondo supports multiple payment methods, including Klarna and PayPal, the two leading BNPL services in Europe. With our booking system, you can also offer your customers a more “traditional” form of deferred payment by asking for a deposit at checkout and collecting the remaining amount when the customer arrives on-site. For further information, don’t hesitate to book a free demo with one of our consultants.

Book a demo

Get a personalized demo or create your free account now

Take your business to the next level with Regiondo - it's free to get started and you don't need a credit card.