As travel becomes more aspirational and expensive—especially for families, international trips, or luxury experiences—the demand for flexible payment options has soared. Customers no longer want to pay the full amount upfront. Instead, they prefer financial flexibility that aligns with their budgets and preferences.
Travel booking systems are adapting by integrating modern fintech capabilities—like EMI (Equated Monthly Installments), Digital Wallets, and BNPL (Buy Now Pay Later)—into their core payment workflows. This flexibility enhances the booking experience and empowers businesses to improve their conversion rates significantly.
Evolution of Payment Options in Travel Booking
Earlier, travel bookings were limited to basic methods like:
- Credit/debit card payments
- Direct bank transfers
- Cash payments through travel agents
With the rise of e-commerce and fintech platforms, travel companies have started embracing:
- EMI options that allow users to split payments over several months
- Digital wallets offering quicker, one-click payments
- BNPL schemes enabling users to book now and pay later without a credit card
This shift was fueled by user expectations for convenience, trust in digital finance platforms, and the emergence of alternative lending models.
Why Flexible Payments Matter in the Travel Industry
The travel industry is uniquely positioned where flexible payments deliver measurable business benefits. Here’s why:
- High Transaction Values: Travel purchases are often expensive (e.g., ₹20,000–₹2,00,000), making installment-based payments more attractive.
- Spontaneous Decisions: Customers are more likely to confirm bookings when they don’t have to pay the full amount immediately.
- Increased Affordability: EMI and BNPL models make premium services (like business class, resort stays) accessible to wider demographics.
- Reduced Cart Abandonment: Many users drop out during payment if no flexible option is available.
- Customer Loyalty: Offering preferred payment options boosts repeat purchases and user satisfaction.
Understanding the Core Technologies
1. EMI (Equated Monthly Installments)
EMI allows travelers to divide their payments over time, typically in 3, 6, 9, or 12 monthly installments. It’s especially popular for higher-ticket bookings.
Key Benefits:
- Makes large expenses digestible
- Offers flexibility with interest/no-interest options
- Builds customer trust through transparency in pricing
Challenges:
- EMI options depend on card issuers and financial institutions
- Interest rates and tenure eligibility may vary per user
- Requires real-time display of breakdowns for clarity
2. Digital Wallets
Digital wallets are preloaded or linked payment platforms that simplify transactions without manual card or banking input.
Popular Examples:
- India: Paytm, PhonePe, Mobikwik
- Global: PayPal, Apple Pay, Google Pay
Key Benefits:
- Speedy checkouts, especially on mobile
- Often includes cashback or promotional rewards
- Increases trust with local payment brands
Challenges:
- Wallet balance limitations
- Dependency on third-party wallet platform uptime
- Refund processing can be delayed if not well integrated
3. BNPL (Buy Now Pay Later)
BNPL allows users to book travel immediately and pay later in installments, often without needing a credit card or prior credit history.
How It Works:
- BNPL partner offers instant credit approval based on phone number, PAN, or mobile OTP
- User gets a credit limit and selects installment options
- Travel platform receives the full amount upfront from BNPL provider
Key Benefits:
- Appeals to young, credit-light customers
- Often zero-interest (if paid on time)
- Promotes faster decision-making
Challenges:
- Credit rejections due to underwriting logic
- Payment defaults impacting BNPL partner relationships
- Reconciliation complexity in case of cancellations or disputes
System Architecture Considerations
To support EMI, Wallets, and BNPL seamlessly, the travel booking system must follow a modular and extensible architecture. The payment layer should allow for quick integration, customization, and failover support.
Best Practices:
- Use a unified payment interface layer to support multiple providers
- Design payment modules as independent services or plug-ins
- Implement a transaction state machine to handle transitions from pending to paid, failed, or refunded
- Allow asynchronous updates to handle third-party delays (e.g., BNPL confirmation or refund approval)
Integration with Payment Gateways and Providers
Travel platforms must work with robust payment providers that support EMI and BNPL capabilities. Each provider comes with different APIs, workflows, and limitations.
Example Providers:
- Razorpay: EMI on credit cards, BNPL via Simpl/Zest, UPI, Wallets
- PayU: EMI, BNPL, Netbanking
- Stripe: Global BNPL providers like Klarna and Affirm
Integration Focus:
- Real-time API integration for plan availability
- Tokenized payment support
- Transaction status updates via webhooks
- Refunds and partial payment handling
Each provider will have a unique approval, authorization, and reconciliation process, which must be accommodated in the system design.
Risk Management and Fraud Prevention
When dealing with deferred payments like EMI and BNPL, financial risk increases. To manage this:
Precautionary Measures:
- Use built-in credit risk assessment APIs from BNPL providers
- Monitor transaction frequency to prevent abuse (e.g., booking multiple high-cost trips within a short time)
- Match IP address, device fingerprinting, and geo-location to detect anomalies
- Track failed or abandoned EMI/BNPL transactions for review
Integrating fraud detection and credit scoring ensures long-term financial health of the platform and its partners.
UX Design for Multiple Payment Modes
User experience (UX) plays a crucial role in maximizing conversions. Customers should understand their payment options without confusion or friction.
UX Recommendations:
- Show all payment options upfront, categorized logically (e.g., cards, EMI, BNPL, wallets)
- Provide installment plan previews, including total payable amount and interest
- Offer BNPL explanations (tooltips or pop-ups) for first-time users
- Allow users to toggle between one-time and flexible payments
- Ensure a mobile-first design since most bookings now originate from smartphones
A well-designed UX can make the difference between a completed booking and an abandoned cart.
Compliance and Regulatory Challenges
Payment systems in the travel industry must comply with both financial regulations and data protection laws.
Key Regulations to Address:
- PCI-DSS: Required for processing or storing credit card information
- RBI Guidelines (India): Restrictions on BNPL lending, EMI disclosures, and KYC norms
- GDPR and Data Localization: Especially if dealing with international users and data storage across borders
- Refund Policies and Timelines: Must be transparently conveyed to users during EMI or BNPL bookings
Non-compliance can lead to legal penalties, payment bans, or customer trust issues.
Integrating Razorpay and Simpl in a Travel Booking Platform
Objective:
Enable users to choose between EMI (via credit card) or BNPL (via Simpl) for a ₹25,000 travel package.
Approach:
- Razorpay was used to fetch and display available EMI plans during checkout.
- Simpl was integrated to offer instant BNPL approval based on mobile OTP verification.
- Both options were presented clearly in the payment section, with repayment timelines and total amounts.
- A webhook system was used to reconcile payments, send confirmations, and initiate refunds when necessary.
Results:
- EMI and BNPL bookings accounted for over 40% of all Diwali campaign bookings
- Average Order Value (AOV) increased by 28%
- Cart abandonment dropped by 17%
- Positive customer feedback on ease of payment and flexibility
Future Trends in Travel FinTech
The intersection of fintech and travel is evolving rapidly, with innovations such as:
- AI-driven credit scoring: Instant decisions based on behavioral data
- Tokenized cards: Reducing fraud while allowing recurring payments
- Unified checkout experiences: Combining EMI, BNPL, and wallets in one smart interface
- Cryptocurrency: A niche but growing trend in international travel bookings
- Voice-enabled transactions: Using voice assistants to complete bookings with stored wallet data
Platforms that proactively adopt these trends will maintain a competitive edge.
Conclusion
Modern travelers demand not just choice in destinations but choice in how they pay. By integrating EMI, Wallets, and BNPL into their systems, travel companies unlock powerful levers to:
- Improve customer satisfaction
- Increase conversion rates
- Expand reach to new user segments
It’s no longer optional for travel platforms to support flexible payments—it’s a necessity. By building these capabilities into the core of their booking systems, companies can ensure both scalability and customer loyalty in a rapidly evolving market.
FAQs
Q1. What are the benefits of offering EMI in travel bookings?
EMI reduces the burden of one-time payments, enabling users to afford expensive trips while increasing conversions for the business.
Q2. How is BNPL different from EMI?
BNPL often doesn’t require a credit card or formal loan approval. It provides instant credit, usually without interest, for short-term repayment.
Q3. Are wallet payments secure?
Yes, if integrated via PCI-compliant payment gateways and proper tokenization mechanisms, wallet payments are highly secure.
Q4. Can refunds be processed via BNPL?
Yes, but refunds typically go through the BNPL provider’s internal system and may take longer than standard refunds.
Q5. Do EMI and BNPL affect credit scores?
Missed payments on BNPL or EMI plans may be reported to credit bureaus, potentially impacting the user’s credit score.