New research from Worldpay has revealed that Chinese travellers are shedding their credit wariness – at least when it comes to paying for flights and holidays. 72% of Chinese travellers surveyed by Worldpay for its Why Do They Pay That Way? Study said that they had paid for their last holiday using a credit option, such as a credit card or bank loan, in a finding that challenges long-held global assumptions about China’s ‘savings culture’.
Worldpay surveyed 12,000 travellers across six markets, including China, India and Australia in APAC. The research reveals how fundamentally attitudes towards credit and debt have shifted in China in recent years. The credit-happiness of travellers in the world’s second biggest economy means that Chinese spending habits are now much more closely related to those of their counterparts in the US than in other BRIC nations. For example, 67% of travellers in India had paid for their last holiday out of savings rather than using credit.
And for once, it’s not millennials leading the trend. Instead, older travellers are going into debt to fund their passion for travel. Among Chinese as well as US travellers, the trend towards credit-funded holidays was most pronounced among ‘late millennials’ and younger Gen-Xers. 73% of 26-35 year olds and 77% of 36-45 year olds in China admitted they had gone into debt to pay for their last holiday, compared to 69% of 26-35 year olds and 71% of 36-45 year olds in the United States.
While the world’s two largest economies had a lot in common when it came to spending, Worldpay’s research also showed a huge gulf between China and the US in terms how holidaymakers pay for flights and holidays. Only 44% of Chinese travellers said they would pay for their next holiday with a credit card, as compared to 81% in the United States. Chinese travellers have long preferred alternative payment methods, a trend that arises once again in Worldpay’s recent survey. 32% of respondents in China said they would book their next flight or holiday using Alipay and 10% said they would use the domestic, pre-authorised debit card UnionPay.
Travellers in other APAC markets also want travel companies to offer alternative payment options. 96% of credit and debit card users in India said that if given the choice, they would prefer to pay with Net banking when booking a package holiday. As opposed to credit-happy travellers in China, travellers in India prefer their holiday payments to come out of a current account, either by debit card (25%) or Net banking (16%). In Australia, travellers are more comfortable than either of their APAC counterparts in paying for their holidays with plastic. 65% of Australians said they would book their next trip with a credit or debit card, slightly ahead of the global average (59%). At the same time, 76% of Australians surveyed also said they were interested in paying for package holidays with an instalment plan.
Phil Pomford, General Manager Asia Pacific, Global eCommerce, Worldpay, commented: “These findings show that – at least when it comes to flights and holidays – China is now very much a consumer-driven economy and is beginning to challenge the US in terms of spending power. Yet the real learning for airlines and travel companies who want to tap into the passion for international travel means recognising that while everyone wants to go on holiday, the way they pay for it varies remarkably from country to country. This is especially true in APAC where markets such as China and India have long preferred to use alternative payment methods, as opposed to traditional debit and credit cards.”
Pomford continued: “In order to benefit from consumer demand for flights, hotels, package holidays and other travel experiences, businesses must support both locally preferred and internationally-recognised payment methods. Holidaymakers are looking to the travel industry to innovate and provide alternative ways of funding their next holiday that aren’t tied to traditional payment methods. Whether it’s the option to pay for a beach break using the eWallet Alipay, or an instalment plan that spreads the cost of a round-the-world air ticket, travellers all over the world are hungry for more ways to pay.”