New research reveals that adding diverse payment options directly increases checkout conversions and basket sizes.
This is one of the findings of The future of travel in South Africa: How travellers discover, book and pay, commissioned by leading African payment service provider Peach Payments and South Africa’s fastest-growing flexible payment provider PayJustNow. Conducted by Phocuswright, the research involved one-on-one interviews with key executives in the travel and tourism sector about the use of online payment technologies by South African consumers.
Digital wallets are rapidly becoming the preferred choice for South Africans, with nearly 4 in 10 (39%) citing them as the fastest payment option in research by Visa. Flight booking company Travelwings, for instance, found that adding Apple Pay and Google Pay led to a “sudden uptick in transactions”, highlighting that removing friction at the point of purchase is key to driving conversion.
“The rapidly expanding Buy Now Pay Later (BNPL) sector is increasingly playing the same role,” says Daniel Hawkins, executive head of marketing at PayJustNow. Another finding is that industry leaders like Travelstart increased their BNPL share from 3% to 6% in just one year.
“BNPL is playing a critical role in boosting loyalty and expanding access to more travellers who want cashflow-friendly payment options to secure their purchase,” says Hawkins.
Other industry experts polled in the research note that mobile money is essential because it allows customers to interact online rather than travelling long distances to physical shops to pay.
Africa is the global epicentre for mobile money, accounting for 74% of all mobile money transactions worldwide. Market leaders like M-Pesa now have over 40-million users in Kenya alone, providing a vital bridge for consumers who prefer digital balances over physical cash.
Mitra Sorrells, SVP content at Phocuswright, says: “As travel demand evolves in South Africa, payments will be a key area of focus for companies looking to improve conversion and better serve customer needs. Success will depend less on any single payment method and more on reducing friction across the booking process.”
Adding diverse payment options may attract more consumers, but it presents challenges for merchants. Travel finance teams describe managing multiple payment providers as a “nightmare” that often requires excessive headcount to manage. Disparate data formats and varying commission rates make automated reconciliation nearly impossible for scaling businesses. The research identified that merchants solve this through sophisticated payment orchestration and recon APIs from payment service providers.
Peach Payments CEO Rahul Jain says: “These solutions talk to multiple backend providers to ensure the settlement process is seamless.”
Digital wallets pose a different challenge – travel providers say international settlements for these wallets can lead to costly exchange rate conversions for the buyer.
Another challenge for international transactions is that many fail in South Africa due to 3D Secure (3DS) technicalities. This may force consumers to attempt payments multiple times, increasing frustration. Researchers suggest that merchants look for PSPs that manage real-time risk checking, are PCI DSS Level 1 certified, and optimise for African banking rails to ensure high authorisation rates and local settlement.
The full research findings are being made available to the travel industry to assist merchants in optimising their websites, Jain says. The research is also available for download at https://www.peachpayments.com/the-future-of-travel-payments-in-south-africa/