The pandemic has changed many aspects of consumers’ lives, including their travel and payment habits. This shift is increasingly evident in Latin America, where travel was previously a source of growth for the region. The global health crisis dealt severe blows to the industry at the start of 2020; however, the industry is now recovering from the fallout.
Companies that have weathered the turmoil have seen a large-scale realignment in the travel space, said Jessy Caiadoco-founder of Exquisito Peru, a small company specializing in food tours in Peru. The company, which launched in 2017, has witnessed first-hand the transformation that has followed in the tourism and payments spaces in Latin America.
“A lot of companies or individuals have just gone out of business,” he said. “There are a lot of smaller players who are no longer there.”
As tourist numbers slowed and concerns over the pandemic grew, a growing number of small business employees reconsidered their plans and turned to industries with more secure jobs, changing America’s travel landscape. Latin. Caiado said this development heralded a significant transformation of the region’s payment space for the businesses that remained.
Latin American travel industry payments go digital
Caiado said Exquisito Perú accepted credit cards from the start, but switched to being entirely cashless once the pandemic started. Still, payment processing has long been a stumbling block, he said, as Peruvian payment processors often incorrectly flag foreign credit card payments as fraudulent. Many payment gateways also became more restrictive towards the end of 2020 due to increased levels of fraud, blocking the processing of legitimate payments.
“We were getting rejected payments for no reason,” he explained. “At least in Peru, when it comes to accepting foreign credit cards, I think in terms of assessing fraud, there’s still a lot of work to do.”
Finding a reliable treatment partner resolved some of these frictions, but many remain. Apple Pay and Google Pay aren’t yet available in Peru, Caiado said, eliminating some of the better-known digital wallets from the payments equation. In particular, consumers in Peru and other Latin American countries are used to using secure electronic transfers rather than credit cards, although he said they were starting to feel comfortable paying by line.
Still, a few new payment methods are making their way into the region, particularly mobile solutions. Caiado said Exquisito Perú has established partnerships with local hotels in which the hotels display the company’s offers along with QR codes, allowing travelers to browse, book and pay for tours. He said this has been beneficial as Latin American consumers are increasingly accustomed to using apps and mobile phones to place orders, make payments or get more information about products and services.
“If we look at Google Analytics, we see an increase in mobile bookings of almost 25%,” Caiado noted.
Emerging travel trends in Latin America
Cancellations and delays have become a sad reality for travelers over the past two years. Caiado said this has made many consumers prefer to book their trips through larger and more established online travel agencies, rather than engaging in direct booking.
“If something goes wrong in terms of canceled flights or closed borders, [consumers] believe it will be easier to reschedule or get a refund if they book through a more reliable website than a small tour operator,” he said.
Caiado also said the trend for “hassle-free” travel is on the rise. Trips that focus on offering off-the-beaten-path or authentic engagements are particularly popular today, although travelers prefer to have the details of these experiences planned out for them.
“I think that will be more and more important over the next five years,” he said. “People are more and more conscious of their time. They want things to be very simple and very quick.
Speed, safety, security and ease of payment are the most important considerations for Latin American consumers in today’s travel market, and there is no sign that they will lose their importance anytime soon. Travel industry companies that can solve the payment frictions facing consumers in the region and leverage the mobile payment tools that are becoming increasingly popular are poised to win business for everything from flights and reservations at food tastings in the years to come.