The tourism sector has today grown to be an integral part of the world’s economy. Tourism currently represents 10 per cent of the world’s GDP and is a substantial global job provider.
There is a big room for growth in Southeast Asia’s tourism, however. Recent statistics predict that the tourism and travel sector in the region will rake in US$222.8 billion by the year 2027 — 5.3 per cent of the total GDP. This means there are a lot of opportunities that could be tapped into.
A window of opportunity
China has emerged as a high-growth economy not only in the region but the entire world, and it has a substantial share in contributing to the region’s tourism sector growth. As incomes grow, travel and tourism in China are also on the rise, with 166 million individuals travelling to other countries in 2019 alone, and growing at least 11 per cent year-on-year.
Southeast Asian countries, particularly Thailand, Malaysia, and Singapore, are among the top list of destinations by Chinese travellers, contributing to a steady outflow of tourists, as well as revenues for destination countries.
According to a recent report by the Pacific Asia Travel Association, Southeast Asia destinations expect to see collective receipts from tourism increase from more than US$432 billion in 2018, to around US$670 billion by 2023. Data from Thailand’s Ministry of Tourism and Sports indicate that China is the top country by tourist origin, at 8.52 million Chinese visitors in the first three quarters of 2019 alone, contributing at least THB427 million (US$13.68 million) in that period.
However, even amidst the growing number of travellers within the region to other destinations within Southeast Asia, it is important to note that a substantial part of the population has no adequate access to payment or bank facilities.
Recent statistics show that only 104 million adults of the 400 million are fully banked or have access to financial services, while 198 million of them do not own a bank account at all.
This largely implies that most transactions are conducted in cash payments, which are obviously costly in terms of forex conversions. In addition, having to travel to multiple destinations with lots of cash in hand comes with the risk of losing money in transit.
Digital payment solutions for travellers
Fintech solutions such as digital payments allow individuals to transact online without having to make direct cash transactions. Solutions such as these are crucial to further growth in the tourism sector in Southeast Asia, and many players in the region have done efforts to integrate digital payments into their platforms.
This includes, for example, hotels, airlines, and travel agencies, which benefit from being able to offer ease-of-payment to customers.
According to a joint study by Google, Temasek, and Bain & Co., digital payments in Asia will reach over US$1 trillion by 2025 — a 500 per cent growth from 2019.
This clearly indicates a shift towards digital transformation in the payments ecosystem, which is geared towards addressing the challenges of the huge unbanked population in the region.
Travel and tourism can be a big use case for such technologies. “The tourism industry is a perfect use case for digital cash and payments in general, as it is very much an international business that involves many different currencies,” says Felix Mago, Co-Founder of Dash NEXT and Dash Thailand.
Also Read: Report: Indonesian startups took 70 per cent of travel tech funding in 2019
He adds, “For example, a customer books a trip to Thailand and pays in US Dollars. But the hotel in Thailand receives Thai Baht. Of course, someone has to change the USD to THB and these conversions increase the cost and time for settlements in the background.
By using Dash’s digital payment solutions, money can be transferred within seconds with almost zero fees. So businesses can profit from lower costs and give that advantage to their customers. But this is not all. As tourism is a very competitive industry and not many platforms are accepting digital currency payments yet, businesses can also easily attract new customer segments and, therefore, gain a competitive advantage.”
Travel companies from China can benefit from incorporating digital payments infrastructure, having the most outbound travellers in Asia–especially with apps integrated with blockchain technology. “The Chinese market provides a great opportunity, as the number of digital cash holders and users is constantly increasing,” says Mago.
While there are few other digital payments platforms such as WePay, Dash does not require any middlemen such as banks, which charge high fees (for instance with international transfers).
For smoother and seamless travels for tourists out of China and within Asia, the importance of facilitating easier payment systems cannot be overemphasised.
Digital payments can be one factor that will transform the sector holistically by catering to the unbanked population and giving them access to financial services that would otherwise have been difficult to obtain.
Also Read: Today’s top tech news: Hong Kong’s TravelFlan raises US$7M in Series A funding round
Kenny Au, Founder, Elevate Ventures and Advisory, also shares in the belief that digital payments hold the key to transformation in the tourism and travel sector, “Southeast Asia has a US$1 trillion dollar opportunity in the traveltech space, and innovative fintech solutions can disrupt the entire industry because of the huge benefits it provides especially for tourists from China.”
According to a Nielsen study, over 60 per cent of Chinese tourists made payments via mobile worldwide, including popular Southeast Asian countries such as Thailand. “With digital payments, related industries can tap into this market to add value to the travel sector, such as loyalty awards, integration with other tech-driven services, and more,” adds Au.
There is a big opportunity for travel businesses to increase their market share and attract new customers by integrating digital payment solutions. “As a travel business, all you have to do essentially is plug in this new payment solution and you are ready to attract a new group of customers,” says Mago.
–
Editor’s note: e27 aims to foster thought leadership by publishing contributions from the community. Become a thought leader in the community and share your opinions or ideas and earn a byline by submitting a post.
Join our e27 Telegram group, or like the e27 Facebook page.
Image Source: Unsplash
The post RIP travellers’ cheques: Digital payments pave the way for faster, cheaper, and more convenient travel appeared first on e27.
