How can we better serve travel-deprived consumers in digital age

Chelsea Li March 27, 2023 09:29

Three years into the pandemic much has changed - online shopping has become the synonym for shopping and working from home has become the new ‘normal’. However, consumers’ desire for travel has never changed, if not increased more.

With international travel restrictions relaxing, Hong Kongers are itching to pack their bags and jump on a plane. Research from Wise found that 1 in 3 (33%) Hong Kongers intend to spend more on travel or holidays. Yet the most frustrating thing for consumers is the hassle they have to deal with when making foreign currency transactions.

The survey indicates that Hong Kongers are generally frustrated by high transaction costs, hidden fees, slow transfers, and unfriendly conversion rates. Consider this: an average Hong Konger typically makes two international transactions per month which means an estimated 113 million currency transfers are made by Hong Kong consumers annually. This adds up to a ton of unnecessary headaches, in addition to time and money wasted on inefficient processes and non-transparent practices.

Consumers are getting the short end of the stick due to antiquated payment infrastructure. The lack of transparency in currency exchange, where many providers tend to add an undisclosed markup to the exchange rate, is potentially causing a yearly loss of $1,400 per person. Such unfair experiences can have a snowball effect on consumers’ confidence in service providers. Already, nearly 7 in 10 consumers (69%) say they will avoid using a provider for any other service if they don’t practice fee transparency, showing that one bad experience is enough to drive customers away.

As Hong Kong is gearing up for digital innovation across industries, it’s worth pondering what it means for the financial services industry. Will it be enough just to give an ‘app’ lifting – moving all existing services to an App? Or should the financial service industry innovate ‘new’ products and features that put consumers' interests at the centre, being transparent and future-proof?

Let’s reimagine the future of travel to start with. While the likes of Expedia and Booking.com are revolutionising how people book flights and accommodations, we have yet to tackle ongoing pain points like currency exchange to give consumers a genuinely frictionless travel experience. Just like consumers can get a clear view of the accommodations they pay for at any booking site nowadays, they deserve a similar level of transparency when it comes to cross-currency transactions with any service provider, such as knowing how much they are paying and at what rate.

Consumers unknowingly receiving poor exchange rates due to opaque traditional practices should not be the norm — it’s high time the financial industry rethink foreign exchange practices and give consumers the level of experience they deserve by making it low-cost, convenient and jargon-free when planning international trips.

The gains of bringing convenience across all facets of travel are abundant. For instance, as younger generations are influenced by social media to book more spontaneous holidays, tokenisation and merchant-initiated transactions are gaining momentum in the tourism industry as it allows these customers to pay much faster, improving the user experience. Such seamless and convenient payment experiences should extend beyond booking to in-destination spending.

To revive the sluggish travel industry, we must consider the entire customer journey, including how payments impact travel experiences, rather than simply applying a narrow view by digitising existing services like booking a flight. Vertical digitisation is the way forward. Let's not forget to empower consumers to save every dollar possible when they need to exchange money. After all, travel is borderless, and so should the way we fund our holidays.

-- Contact us at [email protected]

Chelsea Li

Product Manager, Wise