EyeforTravel Europe 2018

June 2018, London

The death of cash in travel

The payment landscape is changing but is cash really in terminal decline? An EyeforTravel report goes in search of answers

From e-wallets to currency cards, peer-to-peer exchanges, cryptocurrencies and, of course, the good old credit and debit card, cash is having to compete with a host of alternatives that aim to be more secure and convenient than traditional payment methods. eWallets, in particular, are growing in popularity; in China, where e-wallet transactions run into the trillions, there is WeChat Pay and Alipay. Saudi Arabia has Sadad, the Netherlands has iDeal and in Sweden there is Klarna. In fact today, only 25% of Swedes, the report notes, use cash during the course of a week.

Ovidiu Olea, founder and chief executive of Hong Kong-based fintech start-up Valoot, says Alipay and WeChat Pay are now integral to commerce in China. “More than just replacing cash, they have successfully replaced plastic as well. They have leapfrogged other parts of the world where there is a move to contactless and instead they have delivered convenience through QR codes,” he says.

Debit and credit cards may be an easy option to default to, but the hidden fees soon start to pile up

The fintech sector has also make the leap, by using low-cost technology infrastructure and operating on razor thin margins. One innovation, thanks to the mobile revolution, is that payment cards can now be controlled by mobile apps, which allow for a high degree of flexibility in exchanging currencies. As Ian Strafford Taylor, chief executive of currency card company FairFX, says: “The pre-paid card market began to take off when consumers started to realise that high street banks were offering them a bad deal on exchange rates and fees for spending and withdrawing cash abroad. Debit and credit cards may be an easy option to default to, but the hidden fees soon start to pile up over the course of a holiday.” 

End game?

Proliferation in alternatives to cash is causing some in the industry to believe that its days are numbered. “Cash is in demise,” says Alex Fitzpatrick, head of global payments at travel commerce company Travelport, who belives that eventually society will be cashless. According to Fitzpatrick, governments want to move payments to a digital platform to increase transparency, and businesses would also prefer to do without cash.

If you were to cater for every traveller from every country you would have to integrate every single form of payment out there

However, for Thomas Helldorff, Worldpay’s vice president for vertical growth in airlines and travel, cash will still be relevant when people go abroad.  “If you were to cater for every traveller from every country you would have to integrate every single form of payment out there. Not a lot of them have, so far, managed to get global reach. It has taken the likes of Visa and Mastercard decades to get there.”

Although consumers in some countries are highly engaged in the digital revolution sweeping payments, there is strong divergence between markets. In Germany and Austria for example, cash still wins the day. On average, Germans carry the most cash among European consumers. They also prefer to pay using bank transfer when shopping online and shy away from credit cards. It’s a different story in Italy, finds the report, demonstrating that even within the EU there is a high degree of variation. Localisation needs to extend beyond language and cultural elements to payment methods for travel brands. 

Download this free report now which includes insights from companies including Amadeus, easyHotel, Eurostar, Mastercard, Travelport, Worldpay and more

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