Linked trips induce payment friction at the X boundary

The grand reopening is upon us: Travel is increasing, airports are crowded and railroads are overloaded. Cross-border travel is seeing a rapid return.

Students are returning to school in person, leaving the confines of virtual classrooms, and international students are finding their way into dormitories and scholarship offices. SVP Daniel Marovitz, Leap Finance Founder Arnav Kumar and Cashfree Payments Co-Founder Reeju Datta told PYMNTS’ Karen Webster that India highlights payment frictions for all as consumers move physically beyond their borders .

As e-commerce grows in that country across all kinds of verticals, companies face the challenge of getting the payment mix right in an effort to increase conversion and capture more consumer spend. Simply put, the most “popular” payment methods are not the methods consumers may prefer to use when leaving their home country.

Travel offers a microcosm of challenges and opportunities. As Marovitz said, India was the third largest source country for international travel before COVID.

“Traveling is a basic instinct,” he said. “And India is waking up to that,” which in turn is driving a surge in online bookings — a surge that brings its own complexities. There is a big difference between how travel was planned and paid for in years past, with the process usually involving travel agents.

Today, consumers are mostly booking their travel online or through travel apps. Along the way, as they navigate restaurants and car rental destinations, these consumers want the payment experience to be consistent. Many of the financial frictions still in place for international travel revolve around making transactions and dealing with cancellations and refunds.

Call it “connected travel,” Marovitz said, since a trip can be simplified into a series of tabs in an app. The process itself is flexible enough to make it easier than ever to change travel plans in an efficient, intuitive way across all currencies, time zones and FX rates.

Datta noted that localized payment methods can also eliminate some of the FX pain points and save on cross-border fees.

Demonetization sets the stage

The stage is set for modern payment methods to take root in India, Marovitz said, after demonetisation took effect six years ago under Prime Minister Narendra Modi. This helped increase the use of digital payments and cards, but the market has been a bit of a dud, given the fact that there are one billion debit cards in the country and only about 60 million credit cards.

The RuPay card payment network has become extremely important to consumers and its domestic dominance is spreading abroad. Merchants who simply look at what is most popular in terms of payment methods will, in total, miss out on new revenue generating activities.

Connected: Low-code ‘Legos’ help Indian firms scale cross-border payments

As Cashfree’s Datta said, while cards may have been the most prevalent form of online payment a few years ago, in recent years, UPI has emerged as a preferred real-time payment option, driving more transaction volume than debit cards. debit and credit. combined.

“It’s probably the most efficient that payments can be,” he said, noting the simple, instant, real-time bank-to-bank transfers. This speed can be a lure for businesses that operate outside India and want to enter the market, or firms that are based in India and want to serve Indian consumers while going abroad.

There have been at least some moves by India’s central bank to help improve money mobility, as it created the liberalized remittance scheme, which allows individuals to send up to $250,000 in a given year to finance education , travel or gifts.

Providers, he said, face the task of improving the speed of cash flow and harmonizing these fund flows. Datta said these improvements can happen through low-code or no-code solutions and application programming interfaces (APIs) provided by Cashfree.

“The value proposition we’re bringing is to enable local payment methods,” he said. Advanced technologies can be used to assist documentation such as offering letters and passports that may accompany payments, as well as check expense calculations against the $250,000 limit.

Payment aggregators are increasingly important, he said, as enterprises would otherwise have to connect and integrate with banks on a market-by-market basis. Enabling local payment acceptance for cross-border transactions can be a difficult hurdle, Datta added.

Aggregates like Cashfree can help significantly reduce the cost of transactions, with 60% savings on FX fees and splitting travel-related payments to ensure the right amount reaches the right bank account.

The Students

The number of Indian students traveling abroad increased by 44% in 2021 compared to previous years, and the country is poised to overtake China as the country that sends the largest number of international students to study in different parts of the world ( is currently in second place).

As Kumar said, “Indian students are motivated to have a global career and a global education.” Paying tuition becomes a challenge, given the fact that many Indian families have trouble accessing a variety of financial products in those new countries.

See also: Cashless teams up with EasyTransfer to facilitate Indian university payments abroad

Platforms like Leap help consumers start new financial journeys in those host countries while securing loans and helping borrowers meet the paperwork and regulatory requirements (such as visas) to get that capital out of India in the first place.

The company also issues credit cards for students, which can be used for a variety of payments to start building credit from day one in their new place of study. Disbursements can also be made directly to the institution, rather than being held in the student’s account and paid to the school at a later date.

“We are able to lower the cost of capital significantly because we can source the loans in a variety of destination currencies,” he said, adding, “India is one of the most emerging FinTech markets for digital payments and the infrastructure is there.”

often / key

Circle: Findings in PYMNTS’ new study, “The Super App Shift: How Consumers Want to Save, Shop and Spend in the Connected Economy,” a collaboration with PayPal, analyzed responses from 9,904 consumers in Australia, Germany, the UK and the US and showed demand strong for a single multi-functional super app instead of using dozens of individual apps.

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