With PayPal, UATP Expands Its Installment Options As Consumer Air Travel Rebounds

Apr 14, 2021

It’s a relatively new arrival among payment options for general merchandise, but the newest buy now, pay later concept has been available for air travel for some time, helping boost airlines after a tough year in 2020. In the latest development, Universal Air Travel Plan Inc. on Wednesday announced it is adopting the Pay in 4 payment option from PayPal Holdings Inc. 

UATP processes alternative payments for more than 30 airlines and travel companies, including major brands like American Airlines, Southwest Airlines, and United Airlines.

PayPal launched Pay in 4 in August and made it generally available in the fourth quarter. The program, which applies to purchases between $30 and $600, lets users pay one-fourth of the purchase price at the start, then make three more installment payments over a six-week period. If users meet the terms, payments are interest-free.

The new service follows a longstanding alliance between UATP and PayPal. “The buy now, pay later product has become increasingly popular for travelers,” Ralph Kaiser, president and chief executive of Washington, D.C.-based UATP, said in a statement. “The PayPal-UATP relationship has 15 years of demonstrated success and we expect that to continue with Pay in 4.”

The latest trend in BNPL has emerged only in the past few years, but builds on the older layaway-plan idea. The twist is that with BNPL, the consumer gets the product upfront instead of having to wait until all payments have been made. UATP is no stranger to installment-payment versions that specialize in the airline industry. In November, it signed with Fly Now, Pay Later, a service of Pay Later Services Inc., and has accepted a similar service from Uplift Inc. for about five years, according to a UATP spokesperson. 

After a year in which the coronavirus pandemic shut down air travel for most consumers, the non-corporate, domestic segment of the business is staging a comeback. “Installment payments have really helped,” the spokesperson says. “Everybody wants to get out and travel.”

Some 39% of consumers have tried a BNPL option overall, with 55% of these users saying they are likely to spend more than they do with other payment methods, according to a survey of 1,500 consumers conducted by The Strawhecker Group, an Omaha, Neb.-based payments-consulting and research company. The results of the research were released this week. 

As a result, the installment-payment concept has attracted a flock of payments providers in the past couple of years, including not only PayPal but also Square Inc. and Klarna Bank AB. Startups like Affirm Inc. and Afterpay Ltd. have also sprung up to specialize in the service.

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