Travel Now Pay Later Market to Reach USD 98.6 Billion by 2033

Introduction

The Global Travel Now Pay Later (TNPL) Services Market is projected to reach a valuation of approximately USD 98.6 billion by 2033, up from an estimated USD 46.1 billion in 2023. This represents a compound annual growth rate (CAGR) of 7.9% over the forecast period spanning 2024 to 2033.

Travel Now Pay Later (TNPL) services are financial solutions that allow consumers to book travel experiences, such as flights, accommodations, and vacation packages, and defer payment over time through installments. These services often integrate with travel agencies, airlines, or online travel platforms, providing flexibility to customers who prefer spreading costs over a specified period.

Typically supported by fintech companies or financial institutions, TNPL offerings are designed to ease budget constraints and make travel more accessible, particularly for younger demographics and cost-conscious travelers.

The Travel Now Pay Later (TNPL) Services Market refers to the ecosystem comprising service providers, travel agencies, fintech companies, and customers engaged in this innovative financial model. This market has been steadily expanding as it merges the growing demand for personalized financial solutions with an evolving travel industry.

The TNPL market spans across various consumer segments, including leisure travelers, business travelers, and aspirational tourists, and operates on digital platforms where convenience and affordability are top priorities. Its growth is largely driven by the synergy between the travel industry’s recovery post-pandemic and the rise of digital payment solutions.

Several factors drive the growth of the Travel Now Pay Later Services Market. A key factor is the increasing consumer preference for flexible financing options, particularly among millennials and Gen Z travelers, who prioritize experiences but may lack upfront financial liquidity. The resurgence of global travel post-pandemic, coupled with the rise of experiential tourism, has further fueled demand for TNPL solutions.

Additionally, advancements in fintech technologies, such as AI-driven credit scoring and seamless integration with travel booking platforms, have enhanced accessibility and user experience. The competitive landscape, marked by partnerships between travel operators and BNPL providers, also contributes to expanding the service portfolio and geographic reach.

Demand for Travel Now Pay Later services is underpinned by shifting consumer spending behaviors and a growing inclination toward deferred payment methods. Economic uncertainty and rising inflation have made consumers more cautious about large upfront expenditures, creating a favorable environment for TNPL solutions. There is significant uptake among budget-conscious travelers, as well as those seeking premium travel experiences without immediate financial strain. The demand is particularly strong in emerging economies where middle-class populations are expanding, and digital payment adoption is rising. Seasonal peaks, such as holidays and major travel seasons, also amplify demand for TNPL services.

The TNPL market presents substantial growth opportunities for service providers and stakeholders. The increasing penetration of digital payment platforms in emerging markets offers untapped potential, as a large segment of the population is gaining access to online travel and financing services. Collaboration opportunities between TNPL providers and travel aggregators, airlines, and hotel chains can unlock new revenue streams.

Additionally, offering value-added features such as zero-interest plans, loyalty rewards, or personalized recommendations can differentiate providers and attract a wider customer base. Expansion into niche segments, such as luxury travel or adventure tourism, also holds promise for market participants seeking to cater to specific traveler preferences.

Key Takeaways

• The global Travel Now, Pay Later (TNPL) services market is projected to reach approximately USD 98.6 billion by 2033, increasing from USD 46.1 billion in 2023, with a compound annual growth rate (CAGR) of 7.9% over the forecast period (2024–2033).
• In 2023, the Leisure segment dominated the market by type, accounting for 55.3% of the overall share.
• The International segment held the leading position in the market based on destination, capturing 65.1% of the market share in 2023.
• Under payment plan types, Installment Plans were the most preferred option in 2023, commanding 52.4% of the market share.
• Travel Agencies emerged as the dominant category in 2023, contributing 33.3% to the market.
• North America led the market with a 60.4% share in 2023, generating USD 27.8 billion in revenue.

Travel Now Pay Later Services Statistics

Payment Systems in the Travel Industry

• Impact on Profits: 66% of travel executives report inefficient payment systems are harming their profitability.
• Cross-Border Payments Challenge: 70% find cross-border payments more complex due to evolving payment methods, even though such payments contribute at least 25% of their revenues.
• Priority on Payment Technology: 90% of travel executives plan to upgrade payment technologies within the next 12 months.

Travel Now, Pay Later (TNPL) Trends

• Ag 35% of travelers aged 25-40 prefer TNPL services over traditional credit cards for travel expenses.
• 72% of TNPL users choose these services for their flexible payment options.
• TNPL interest rates vary from 10% to 30%, depending on the provider and user credit profile.
• 68% of TNPL providers offer interest-free periods of 3-6 months.
• 55% of TNPL users are aged 25-40, and 62% hold a college degree or higher.
• Male users make up 54% of the TNPL user base.
• The average repayment period for TNPL services is between 6-12 months.
• Most TNPL providers accept credit scores between 600-700.
• 22% of TNPL providers reported higher default rates in 2023.
• 40% of TNPL providers now support cryptocurrency as a payment option.
• TNPL demand increased 2.5x, primarily driven by individuals aged 26-45 from urban areas.
• Average ticket sizes for TNPL services increased by 60% in the last 12 months.

Travel Trends Linked to TNPL

• Gen Z and millennials contributed 80% of bookings to Thailand in 2023.
• Duo and solo travelers are the most common, while small groups (3-5 people) and medium-sized groups (5+ people) experienced the fastest growth, at 67% and 68% year-on-year, respectively.

Emerging Trends

• Rising Demand from Younger Generations: Millennials and Gen Z are driving the adoption of TNPL services, as they prefer flexible payment solutions for discretionary spending. Approximately 60% of Gen Z consumers favor installment-based payments to avoid upfront financial burdens, making TNPL a popular choice for funding travel experiences.
• Expansion Beyond Traditional Travel Packages: TNPL services are now being integrated into diverse segments like luxury cruises, adventure tours, and wellness retreats. For example, adventure travel, which grew by nearly 15% annually over the past few years, is increasingly becoming accessible to budget-conscious travelers through installment plans.
• Integration with Digital Ecosystems: TNPL providers are collaborating with travel booking platforms and fintech apps to offer seamless experiences. These integrations allow travelers to select TNPL options during checkout, contributing to the rise in mobile bookings, which accounted for over 40% of global travel bookings in 2023.
• Increased Adoption Among Travel Agencies and Airlines: Major airlines and travel agencies are embracing TNPL as a way to attract price-sensitive customers and increase ticket sales. Airlines offering TNPL options have reported higher conversion rates, with some seeing a 20%-30% increase in sales during off-peak travel periods.
• Focus on Low-Interest or Zero-Interest Payment Plans: Consumers are gravitating toward TNPL providers offering zero or low-interest plans, especially in regions like North America and Europe, where consumer awareness of financial terms is high. This trend is making TNPL services more attractive compared to traditional credit cards.

Top Use Cases

• Budget-Friendly Family Vacations: Families increasingly use TNPL to finance group vacations, allowing them to split costs across several months. This trend is particularly strong in middle-income households, where families allocate 10%-15% of annual income to leisure travel but benefit from spreading the cost over time.
• Last-Minute Travel Bookings: TNPL services are gaining popularity among travelers booking last-minute flights or hotel accommodations, particularly during peak seasons. Approximately 25%-30% of TNPL users opt for these services to manage the higher costs of unplanned travel.
• Luxury Travel Experiences: Affluent travelers are using TNPL to fund premium experiences, such as five-star hotel stays or private tours, which may cost upwards of $5,000 per trip. These services make high-end travel more accessible without requiring immediate liquidity.
• Study Abroad and Educational Trips: Students and young professionals increasingly use TNPL services to finance international educational trips, which can cost between $2,000 and $10,000 per trip. This use case is particularly relevant in countries like India, where demand for affordable overseas travel is high.
• Destination Weddings and Honeymoons: The average destination wedding costs between $15,000 and $25,000, leading many couples to rely on TNPL services to manage upfront payments for venues, flights, and accommodations. Honeymoon packages, too, are frequently financed through installment plans.

Major Challenges

• Risk of Rising Default Rates: With nearly 10%-15% of TNPL users in some regions defaulting on payments, providers face growing challenges in managing credit risks. Economic instability and unemployment can exacerbate these defaults, leading to potential financial losses.
• Lack of Consumer Awareness in Emerging Markets: While TNPL services are thriving in North America and Europe, many potential users in developing markets remain unaware of their availability. For instance, in Southeast Asia, only 30% of surveyed consumers knew about TNPL options for travel.
• Regulatory Scrutiny and Compliance: As TNPL services become widespread, governments are tightening regulations around consumer lending practices. Stricter rules, such as mandatory credit checks or caps on interest rates, may hinder the scalability of TNPL solutions.
• High Competition Among Providers: The travel industry has seen an influx of TNPL providers, leading to a saturated market. This intense competition forces providers to offer lower interest rates or extended repayment terms, which may impact profitability.
• Fraud and Cybersecurity Concerns: Cybersecurity risks, such as account breaches and payment fraud, are significant concerns for TNPL providers. The global cost of cybercrime is projected to reach $8 trillion by 2024, emphasizing the need for robust security measures.

Top Opportunities

• Expansion into Emerging Markets: Emerging markets such as Southeast Asia, Africa, and Latin America represent untapped opportunities for TNPL providers. For example, travel expenditures in Southeast Asia are projected to grow by over 20% annually, with TNPL services helping to unlock demand from budget-conscious travelers.
• Customization of Payment Plans: Offering highly personalized repayment options, such as income-based installments or seasonal payment holidays, could attract a broader customer base. Nearly 70% of consumers prefer tailored financial solutions, creating a significant growth opportunity for providers.
• Partnerships with Tourism Boards: Collaborating with national tourism boards can drive adoption of TNPL services for domestic and international travel campaigns. For instance, targeted partnerships could enable providers to capture a share of the $1 trillion global travel recovery market post-pandemic.
• Adoption of Blockchain Technology: Integrating blockchain for secure, transparent, and efficient payment processing could give TNPL providers a competitive edge. Blockchain-enabled smart contracts could also reduce disputes related to payment defaults, enhancing consumer trust.
• Focus on Sustainable Tourism Initiatives: By offering TNPL options for eco-friendly travel packages, such as carbon-neutral tours or green accommodations, providers can tap into the growing demand for sustainable tourism. The sustainable tourism market is projected to grow by 20%-30% annually, creating a niche for TNPL services.

Key Player Analysis

• Afterpay (Acquired by Block, Inc.): Afterpay has established itself as a key player in the Travel Now, Pay Later (TNPL) market by offering installment-based payment plans. These plans allow consumers to pay for travel expenses in four or more interest-free installments, provided payments are made on time. As of 2023, Afterpay reported $20.7 billion in gross merchandise volume (GMV) and operates in 16 countries, including Australia, the United States, and the United Kingdom. Afterpay strategically partners with airlines and travel agencies to expand its reach, making travel more accessible to budget-conscious consumers.
• PayPal Holdings, Inc.: PayPal’s “Pay in 4” service has been a game-changer in the TNPL market, allowing users to split their travel bookings into four interest-free installments. With 435 million active accounts globally as of Q3 2023, PayPal enjoys a significant competitive advantage due to its established customer base. The company has collaborated with leading travel aggregators like Expedia and Booking.com to extend its offerings, ensuring seamless integration into the travel booking process.
• Sezzle: Sezzle is rapidly gaining traction in the TNPL market by targeting younger, budget-conscious consumers with interest-free installment plans. In 2023, the platform reached 4 million active users globally. Sezzle has formed strategic partnerships with travel companies such as Tripster and Wanderu, enabling customers to finance their travel expenses with greater flexibility. These partnerships have helped Sezzle capture a growing share of the travel payments market.
• Splitit: Splitit differentiates itself by leveraging customers’ existing credit cards to enable interest-free installment payments, making it an attractive option for premium travel bookings. The company focuses on high-ticket travel purchases, providing flexibility for customers who need to spread costs over several months. In 2023, Splitit processed $423 million in transaction volume, with the travel segment contributing a significant share. This unique approach has positioned Splitit as a preferred option for affluent travelers.
• Quadpay (Now Zip): Quadpay, now operating under the brand name Zip, offers installment-based payment services for travel-related purchases. Operating in 13 countries as of 2023, Zip has established a strong presence in North America and Europe. The company processed $15.6 billion in transaction value in FY2023 and has focused on building partnerships with airlines and travel service providers. This strategy has enabled Zip to expand its TNPL services to a broader customer base.

North America Travel Now Pay Later Services Market

North America Leads the Travel Now Pay Later Services Market with the Largest Market Share of 60.4%

North America emerged as the dominant region in the global Travel Now Pay Later (TNPL) services market, capturing a commanding 60.4% share in 2023 and generating a market value of USD 27.8 billion. This robust performance is driven by the region’s advanced financial infrastructure, high penetration of digital payment solutions, and a tech-savvy consumer base eager to adopt innovative financial products.

Additionally, the rising inclination towards travel experiences, coupled with increasing consumer demand for flexible financing options, has bolstered the adoption of TNPL services in North America. Key markets such as the United States and Canada are at the forefront, supported by a well-established travel and tourism sector and widespread awareness of alternative payment solutions.

This region’s leadership is further fueled by partnerships between financial institutions and travel providers, ensuring seamless integration of TNPL offerings within the travel ecosystem. As such, North America continues to set the benchmark for growth and innovation in this burgeoning sector.

Recent Developments

• In 2024, Affirm (NASDAQ: AFRM) announced new merchant partnerships ahead of the holiday shopping season, offering flexible payment options to US consumers at retailers like Garmin, Hotels.com, and Living Spaces. Affirm’s global network now includes over 320,000 merchants, reflecting a 20% year-over-year growth, with integrations across 60% of US e-commerce.
• In 2024, Klarna expanded its partnership with Expedia Group to the US, enabling travelers to book flights and accommodations using interest-free payment options like Pay Now or Pay in 4. This builds on previous launches in the UK, Germany, and Nordic markets, furthering Klarna’s presence in the travel sector.
• In 2023, Givaudan announced plans to acquire key cosmetic ingredients from Amyris, including Neossance® Squalane and CleanScreen™. The move aligns with Givaudan’s 2025 strategy to enhance its Active Beauty portfolio with sustainable and innovative offerings.
• In 2024, CyberTech and PayTech companies led the FinTech funding rounds, raising $679.3 million across 31 deals. Andesite, an advanced AI security platform, secured $15 million to exit stealth mode, marking the largest CyberTech deal of the week.
• In 2024, IFF (NYSE: IFF) agreed to sell its Pharma Solutions business to Roquette for up to $2.85 billion. This deal aligns IFF’s portfolio with strategic priorities while transferring its pharmaceutical excipients and specialty solutions to a global leader in plant-based ingredients.

Conclusion

The Travel Now Pay Later (TNPL) services market is positioned for significant growth as it aligns with evolving consumer preferences for flexible financing options and seamless digital experiences. The rise of younger, experience-driven travelers, combined with advancements in fintech integration, has created a strong foundation for market expansion across diverse travel segments. While challenges such as credit risks, regulatory scrutiny, and market competition remain, the opportunities for innovation, particularly in emerging economies and niche travel markets, are substantial. By focusing on enhancing customer-centric offerings, such as personalized repayment plans and partnerships with travel ecosystems, TNPL providers can unlock new revenue streams and address the growing demand for accessible, affordable, and tailored travel financing solutions. This market’s trajectory highlights its potential to redefine how consumers approach travel spending in an increasingly digital-first world.

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