Several major companies, including Expedia, United, JetBlue, Southwest, and Lufthansa, are testing credits for American consumers to help them pay for their vacations in installments, Skift Daily.
First of all, the ability to pay for your own Travel loans may be available to consumers with average credit scores who are willing to take out short-term, interest-bearing loans.
Meanwhile, the publication notes, tourists with high credit standing are also tempted to pay for luxury trips in installments if they are offered credit on attractive terms.
Loans to tourists are expected to be issued in partnership with fintech startups, or financial companies that are not banks but use software to provide financial services to consumers, sometimes in collaboration with banks.
In the US, the most well-known of these are Affirm, Airfordable, and UpLift. These companies are hoping their services will be in demand in the travel industry, believing they can manage the risk of obtaining these non-traditional loans.
In 2017 UpLift said its average 12-month loan to the travel industry was $2,420. Borrowers typically charged 8.99 percent annual interest.
The startup's clients this year include JetBlue Vacations, Southwest Vacations, United Vacations, and Spirit Vacations.
Affirm, in turn, said its travel industry partners see an average 20 percent increase in customer conversions when offering its product.
The largest tourist client Affirm is Expedia, which began offering Affirm on hotel bookings in May 2016, expanding the offering to include flight packages in July 2016.
Consumers don't need to fully pay off their Affirm loan before traveling. Once a customer purchases a ticket or travel package, Affirm pays for the product and then assumes the risk of loan repayment and transaction fraud, while the consumer makes fixed monthly payments.
Another player in the market is the company Airfordable, which, in turn, developed risk assessment software as an alternative to credit checks. This, according to the company's experts, makes the process more efficient.
The company is focusing on plans to defer payments, which must be made in full by the time of travel.
Meanwhile, According to analysts, consumer attitudes toward buying on credit have cooled significantly since the 2008 financial crisis.Many modern people are generally reluctant to hold credit cards and use them for purchases. Presumably, this category of consumers would also be reluctant to use credit for travel.
Meanwhile, financial services startups have already said they are aware of these trends and know how to handle objections.
Source: trn-news.ru