As travel curbs are continuing to be relaxed around the world, many travellers are finding ways to help travel places and satiate their love for travel.
According to recent reports, Indians are now embracing the Travel Now Pay Later (TNPL) schemes that are offered by Banks, travel companies and third-party lenders.
Currently, this scheme forms just 1% of the gross merchandise value (GMV) of travel agents, these loans are expected to increase to 5% of the total GMV by next year.
The report further says that this scheme is now being utilized by IT professionals and honeymooners.
What is the TNPL Scheme?
The TNPL scheme is where travel websites offer an option to pay off their travel expenses on EMIs. One can make payments in instalments until they pay off the amount, plus interest, if applicable.
The payments are later deducted in an automated way via credit, and debit cards or via bank information that is provided.
“The Travel Now, Pay Later feature is gaining momentum in the country as it provides a convenient option to travellers who would like to visit their dream destination while avoiding any financial crunch. We have been receiving a positive response from consumers,” says Bharat Malik, senior vice president, of Flights, Yatra.com.
How does TNPL work?
Under the TNPL scheme, travel firms either travel up with FinTech companies, loan apps or banks where they offer the travellers loans.
“We have witnessed a 7x surge in queries among customers opting for TNPL, and have received over 1,000 requests recently,” informs Daniel D’Souza, president and country head, of holidays, SOTC Travel.
TripMoney, the FinTech arm of MakeMyTrip has seen a 4x growth within this segment in the last two years. “To power our BNPL offerings, we work with leading banks and Non-Banking Financial Companies,” says a spokesperson at MakeMyTrip.
Offers from travel companies.
The average transaction size of domestic destinations is around ₹14,000 to ₹15,000, travellers can avail loans of ₹65,000 – ₹70,000 on their trip to international destinations.
Travellers availing this offer need to repay in the stipulated period or there will be penalties, one of them being a drop in credit scores.
“If the customer chooses to repay the travel loan within a period of six months, they are eligible to avail of the loan at a 0% interest rate. However, for repayment terms higher than that, the interest rate is about 1% per month/12% per annum.”
Popular destinations where users are availing of TNPL.
Europe, the UK, Australia, Turkey, Jordan and Egypt are some of the leading international destinations that tourists avail these offers. Closer home destinations with easier visa norms such as Dubai, and Abu Dhabi, island destinations like the Maldives and Mauritius, and Southeast Asian destinations like Singapore, Thailand, Malaysia and Indonesia, also rank high among Indian tourists opting for TNPL.