Several global studies show that younger travellers are embracing the use of digital wallets as their primary mode of payment throughout their journeys.
A recent study published by global payments infrastructure company TerraPay noted that real-time transactions using global wallets will account for around 27 percent of all global payments by 2028.
Indeed, it can easily be said that Gen Z is leading the charge when it comes to transforming the global travel industry, particularly in terms of finance and technology.
TerraPay’s vice-president of payments Koert Grasveld explained: “With 79 percent of Gen Z using digital wallets, they are truly the instant generation; driving travel towards a mobile-first, real-time experience. With an estimated attention span of just eight seconds, Gen Z expects payments to be as fast and effortless as scrolling through their phones. Digital wallets perfectly meet these demands, enabling real-time payments that deliver lower costs, broader access, increased inclusion, and new business models.”
What’s driving the surge?
Social media is one of the key factors that has driven the use of digital wallets as the travel payment of choice among Gen Z.
More than that, however, social media is also the primary source of travel inspiration for younger travellers thanks to travel-centric channels and influencers whose opinions push them towards decisions in terms of travel planning.
Indeed, around 40 percent of Gen Z travelers booked their trips directly thanks to TikTok content, demonstrating the platform’s growing influence on purchasing travel decisions.
On the other hand, about 49 percent of Gen Z look to Instagram for travel inspiration.
Wait, what exactly is a digital wallet?
Digital wallets refer to a secure electronic application that enables users to make contactless payments.
These may be installed onto a smartphone or any other device, including wearable tech like smartwatches, allowing users to make payments using their devices rather than cash or conventional credit or debit cards.
One of the key benefits offered by a digital wallet is that it can store both credit and debit cards, vouchers for online or brick-and-mortar retailers, tickets for various purposes, HMO and insurance cards, as well as memberships for retail clubs, fitness centres, and the like.
Related applications for these financial instruments may be downloaded from relevant app stores for both Apple and Android devices, though some smartphone manufacturers like Oppo and Samsung have them pre-installed on a number of their models.
Why would you even get a digital wallet?
Having a digital wallet accords the following benefits for users:
- It makes payments more convenient Digital wallets allow for easy and quick payments., so one needn’t bring cash or too many cards;
- They are more secure Many of today’s digital wallets provide advanced security feature to reduce the risk of financial fraud;
- You need not worry about currency exchanges With a digital wallet, you can effortlessly handle currency exchange without visiting exchange offices anywhere in the world;
- Consider the ease of access Users can store all of their important cards, tickets, and passes in one place, making travel more convenient and streamlined.
- Contactless are a breeze One can easily make safe and contactless payments in stores and restaurants, as well as for other purposes;
- Budget management becomes easier to do Many digital wallets offer tools to track and manage a user’s spending; and
- Many wallets offer a range of rewards and discounts A number of globally-recognised digital wallets provide access to exclusive rewards and discounts to enhance one’s travel experience.
There is, however, still some resistance
Despite the rapid digital adoption of digital wallets throughout the globe, a significant part of the travel industry remains slow to embrace real-time payments.
The hospitality sector is one such area, and the resistance primarily comes from independent operators or smaller properties.
As Grasveld puts it: “Small property owners often struggle with managing international payments due to limited access to advanced digital tools and the high costs associated with traditional banking systems.”
He added that these challenges include slow transaction times, high fees, and complex processes that hinder cash flow and create barriers to competing effectively on a global scale. Many small-scale operators, particularly those managing just one or a few properties, are aware that these inefficiencies can significantly impact their ability to capture and serve international guests smoothly.”
How hospitality providers become more open to the use of digital wallets
In a report published in January 2024, hospitality management service provider GuestService offered some insights on how hotels could gradually open themselves up to the use of digital wallets.
The report pointed out that digital wallets like PayPal and Venmo store users' payment information securely and allow for easy online transactions.
By integrating these wallets into their booking systems, hotels enable guests to make reservations and payments with just a few clicks.
But getting into mobile payments and digital wallet integration goes beyond mere convenience, given how these enhance security.
These technologies utilise encryption and tokenization methods to protect sensitive information, ensuring that guests' financial details remain safe throughout the transaction process.
For his part, Grasveld hopes that the more widespread use of digital wallets in the travel, tourism, and hospitality sectors could persuade more providers to change their minds, if only for the sake of faster, more secure transactions.
As he puts it: “With 97 percent of transactions on the TerraPay platform completed instantly, sending money in real time regardless of amount or location is no longer a pipe dream.”
