In the past, if you wanted to travel, you had to pay the full amount up front. For many of us, this meant months of saving before booking your flights and holiday.
Alternatively, you could put down a deposit, but the balance of your trip would still be due two to three months before your travel dates. And until the full amount is paid off, you're not going anywhere.
But now, the industry has been turned on its head with the option to pay for a trip after you've taken it. Want to get away soon but don't have funds in the bank? Your friends invite you to a cool festival at very short notice? Or maybe you need to visit an overseas family member unexpectedly? No problem.
Many travel sites now let you take your trip then worry about paying it once you're back. It's such a simple concept. Travellers are given the option to break up the cost over six to 12 months (sometimes longer), allowing them to consider trips they would never normally be able to.
Welcome to the world of travel now, pay later.
One of the first companies to introduce travel now, pay later was Flymble in 2017. Its format is similar to others in the industry:
When Flymble introduced the service, it said that 'access to travel should be no different than paying off your mobile phone, a new sofa or catalogue shopping'. Co-founder Vincent Hus told the Evening Standard: 'We live in an instant society where everything is quicker and faster and we don’t see why the approach to booking travel should be any different.'
The company got a great amount of coverage when it introduced the service – it's always wise to remember to think about the travel PR opportunities when launching a new feature. Newspapers and websites are always looking for new and interesting things to write about, and your idea could generate huge levels of interest.
Etihad Airways now offers a pay-later service, too, and allows travellers to pay up to five years after their flight. This means a return flight from London Heathrow to Sydney that costs around £800 can be paid off at roughly £15 a month over 60 months, making long-haul flights a real possibility for those who would normally struggle to raise the funds for such a long trip.
Pay-later schemes are backed by numerous fintech companies that partner with travel companies to offer the service. The fintech firms take on the risk of the customer defaulting on the payment, enabling the customer to receive their booking/flight tickets up front. The travel firms pay the fintech firm a fee (approximately 4-5% of the ticket price) for every sale.
The obvious drawback to travel now, pay later – as with all goods and services offered on credit – is the way it tempts travellers to go on holidays they may not be able to afford. Some providers also add service fees and hefty interest rates, pushing the total price way in excess of what you'd pay if you booked your trip the conventional way.
Unsurprisingly, there's been criticism of such schemes, with claims of lack of regulation and the way some companies 'encourage us to commit to money we don't actually have in our pockets', according to one.
There's always a trade-off – if you want the luxury of jetting off somewhere without having paid for it first, you'll feel the pinch when you return home – possibly with an invoice/payment reminder waiting for you on your doormat, too.
But it's great that travellers have choice. Pay as early as possible before your trip and save money, or go with the flow, head off on holiday and pay for it in instalments once you return. Either way, it's a healthy sign that the travel industry is adapting to the changing needs of its customers.