As travel demand rebounds and trip costs remain elevated, consumers are increasingly looking for ways to spread out the expense of vacations and business travel. Buy now, pay later (BNPL) providers are eager to capitalize on this trend, bringing installment payment options to one of the largest consumer spending categories. Affirm’s new partnership with Booking.com reflects the growing intersection of travel and flexible financing, giving customers another way to manage the cost of flights, hotels, and other travel-related purchases.
Affirm has partnered with Booking.com to offer travelers more flexibility when planning for their upcoming trips.
Instead of paying for a trip in one set payment, Booking.com customers can now pay over time, in the form of monthly or bi-weekly payment installments.
“Our business shows that consumers are increasingly booking travel with more flexible payment options, as Affirm’s travel and ticketing purchase volume grew nearly 50% year-over-year during the quarter ending June 30,” said Wayne Pommen, Chief Revenue Officer of Affirm in a prepared statement. “Expanding our relationship with Booking Holdings enables us to provide Booking.com customers with increased access to responsible credit, given Affirm only approves purchases we believe can and will be repaid.”
Book Now, Pay Later
COVID-19 restrictions have eased and consumers are resuming travel in record numbers. As a result, leveraging buy now, pay later (BNPL) services for travel are on the rise, particularly because of sky-high prices—with airline tickets and hotels taking up the bulk of expenses—and inflation.
Last year, a research study commissioned by Amadeus found that 84% of consumers would turn to installment payment options like BNPL to fund their next trip.
But how much of a dent will BNPL make within the travel industry?
“According to the CFPB, travel and entertainment comprised approximately 3.2% of GMV for BNPL in 2021—a relatively small vertical niche compared to things like apparel and retail,” said Ben Danner, Senior Analyst of Credit and Commercial at Javelin Strategy & Research.
“Travel will be a tough space for BNPL vendors as it is an area dominated by credit card products. BNPL options lack the rich travel rewards such as point accruals and redemptions, as well as perks such as access to lounge spaces and cardholder protections on items such as travel insurance. Perhaps, the zero percent financing will be a driver for some, but we don’t expect it to convert many rewards credit card users,” he added.
While BNPL continues to gain traction across multiple sectors, its long-term role in travel remains uncertain. Flexible payment options may appeal to budget-conscious travelers seeking to manage rising costs, but BNPL providers face stiff competition from traditional credit cards that offer travel rewards, insurance protections, and premium benefits. The partnership between Affirm and Booking.com highlights the growing demand for payment flexibility, but whether installment financing can become a mainstream travel payment method remains to be seen.
