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Deferred payment models are nothing new, but as travel recovers, airlines and others in travel need to find innovative ways to accept payments. It's far from certain that this payment model will help speed up a recovery, or prove to be another huge burden for customers.
As the world and travel industry looks to a return to normalcy, more and more airlines are turning to the buy-now, pay-later model, offering customers a travel recovery incentive to purchase their next adventure or family vacation on credit.
For example, Malaysia Airlines partnered with Fly Now Pay Later, a London-based company offering the airline's UK travelers the option to book their trip now and pay later. Malaysia Airlines' travelers choosing the Fly Now Pay Later payment option at checkout can choose a payment installment that works for them with an interest rate of 29.9 percent, the airline's website said.
“Malaysia Airlines is always looking at solutions that will enhance our customer service offering further. Together with Fly Now Pay Later, we see a huge opportunity to do something innovative that helps travelers by offering a flexible, controlled and customer-centric option to spread the cost of paying for a holiday over a number of months," said Daniel Bainbridge, the airline's regional manager for the UK and Europe.
Bainbridge said Malaysia Airlines' convenient payment alternatives diversify customer choice and decrease cart abandonment rates.
With so many airlines and travel brands around the world offering deferred payments to their customers, is the buy-now, pay-later the future for travel recovery?
"It's a brilliant strategy for airlines to increase revenue and a service many people would appreciate," said Brad Klontz, associate professor of financial psychology and behavioral finance at Creighton University's Heider College of Business, who equates deferred payments to the famous Popeye cartoon's Wimpy quote "I'll gladly pay you Tuesday for a hamburger today."
Klontz said this whole concept has been around for a very long time. And one of the barriers for people going on vacation is that they can't afford it, or don't have the money right now, and this obviously reduces that friction pretty signifi
