Financial technologies, colloquially referred to as fintech, have significantly changed the way the world does business, and this is becoming even more pronounced in the travel and tourism sectors.
Case in point: prior to covering ITB China this year, the organisers sent an info packet regarding some things I needed to do before the trip, and one of those tips was to download and install either Alipay or WePay into my mobile device.
This was because the bulk of daily financial transactions in China were now being done through mobile payment applications like those mentioned, and those run from simple purchases at the local convenience store to settling the bill for one’s hotel stay and even transportation tickets.
Indeed, using mobile payment systems was an unexpected boon and the more widespread adoption of such technologies is already transforming the way we travel.
In this feature, we show how widespread these already are in terms of use, along with both the benefits and disadvantages they have for both travellers and the businesses they interact with whilst on the go.
Global players like Bakuun were presenting their products to travel professionals at ITB ChinaIncreasing use worldwide
According to a 2024 study conducted by Euromonitor International, the total global value of mobile payment transactions was up 12 percent year-on-year, hitting a total of US$8.146 billion across 47 key markets.
Euromonitor experts attributed this to the growing number of smartphone users throughout the world, abetted by more affordable models and brands, some of which are actually tailored to specific user needs, as well as wider access to the internet.
Indeed, 87 percent of global households had at least one smartphone as of end-2023, and 71 percent globally had access to broadband internet and a host of useful applications for everyday living.
At the same time, leading fintech companies like PayPal have been working with point-of-sale (POS) systems providers, thus leading to the more widespread adoption and use of evolving mobile payment tools for everything from banking to retail.
Fintech in the context of travel
At last year’s WebinTravel (WiT) Singapore, the panel Payments: Powering the Next Generation of Travel specifically touched upon how financial technologies are becoming a key part of the experience for many travellers.
According to one post-event report: “The ability to pay with familiar methods can be as important as trying local food or exploring new destinations. Travel companies are tapping into this by offering local payment options, making it easier for travellers to use payment methods they’re comfortable with even abroad.”
South Korea’s Ken Kim, chief executive at GLN International, went so far as to refer to this as payment roaming.
According to Kim: “People travelling want to use the same financial services abroad as they do at home. GLN customers make over 20 more QR payment transactions per person during a three or four-day trip. They see payment as a part of the travel experience.”
Likewise, mobile payment applications address key issues regarding cross-border payments, essentially doing away with high surcharges and slow processing and enabling users to transact in real time.
Also, using payment apps does away with the need to have one’s cash on hand changed at local money changers: travellers need not lose money to marked up exchange rates and have the freedom of transacting like a local.
While Alipay and WeChat's WePay are the dominant players in China, local tech firms are stepping up to the plateThe primary benefits (and disadvantages) of using mobile payment apps while travelling
- Payment apps are more accessible and convenient Mobile payment apps enable users to make purchases without needing to bring large amounts of cash or several credit/debit cards. Likewise, apps streamline the payment process, and many are integrated with popular travel applications, making it much easier to book tours, flights, and other forms of transportation;
- They are more secure than most of the conventional payment options As above, linking the app with an international bank card of one’s choice does away with carrying wallets that could be stolen and could compromise one’s personal safety. Transactions are also done in real time and are put under two-factor encryption for optimal online security; and
- No need to bother with the local money changer Several apps offer competitive foreign exchange rates compared to physical money changing services. Indeed, some go so far as to offer low or even zero currency conversion fees. Likewise, applications like Alipay and PayPal can automatically convert currencies, simplifying transactions in different countries.
Of course, these do not mean that the use of mobile payment apps and other forms of fintech are completely hassle-free.
Older users may find themselves askance as to how to install and use these products while they’re on the go.
Likewise, losing the device in which your primary cash app is installed while overseas can be more than a little inconvenient.
It should also be noted that not all countries accept mobile payments, and it still helps to bring some actual cash and at least one credit or debit card for banking and shopping.
However, given the constant innovation of these applications and related technologies, it is safe to say that fintech in travel is here to stay and the possibilities are endless.
