By Now Pay Later payments in travel and aviation are expected to continue taking market share despite the threat of greater regulation.

Speaking at the UATP Airline Distribution conference held in Budapest, providers of the instalment-based payment category agreed that it has seen “amazing” growth in recent years.

The fast-emerging payment option has weathered the impact of high rates of inflation and interest in a “complex economic environment”, said Vicent Moirez, head of strategic partnerships at FLOA.

This has put pressure on consumer “purchasing power”, but BNPL has been growing at an annual rate of 20% over the last five years despite the impact on an “already low margin” payment type.

New European regulations, that will bring BNPL under tighter consumer credit laws, are due to come into force in November.

Moirez warned: “The risk is to burden the UX [User Experience] which is the DNA of BNPL. We have to be very cautious on the regulation and the impact on UX.”

Matthew Maurer, director of strategy and business development at Upgrade/Flex Pay, described BNPL as tool in the toolbelt for airlines’ merchandising strategy.

“When a customer searches they see a lower monthly price rather than the full price. You can use BNPL to drive certain desired behaviour.

“If an airline is trying to sell more business class seats during a period of lower demand they can offer a BNPL fare promotion for customers to upgrade from economy.”

Moirez said he believed there was still room for BNPL to grow in Europe. It currently average 8% market share although in some countries, like Germany, it is up to around 20%.

“We still have huge room for improvement in some countries,” he said, pointing out that 40% of the BNPL market is younger Gen Z customers.

“AS we all grow older Gen Z by 2023 will take a dominant position in the working population and their spend will grow very strongly by 2030.

“Despite the complex political situation, there are reasons to be optimistic for the market.”

FLOA and Flex Pay have agreed a strategic partnership to help each other’s customers break into the European and north American markets respectively.

The firms are targeting global airline partners in a deal likened by Maurer to a code share between airlines.

He said clients will get the best of both worlds in North America and Western Europe including centralised account management and a single point of contact.

“Given we are both on the UATP network it makes is super safe and seamless to build out the technology integration between us the FLOA API and airlines. It’s a win win win across the board.”

Moirez added: “For us it was obvious to move forward on an agreement. We have already had the first strong interest from a big international airline.”