Let’s consider the global differences in how we make payments: some countries are moving towards a cashless model, while many countries are still very much cash-based societies. Limited card penetration and the need for easy-to-use payment solutions for eCommerce have led to the sharp rise in the number of payment methods being introduced. Alternate forms of payment also help merchants cater to local payment habits, this is reflected in the following stat - in 2019, where 55% of online transactions will be made using alternative forms of payment.
Check out the latest World Payments Report for a complete overview of the global payments environment.
The Rise of Alternative Forms of Payment
Most AFOPs have been created for domestic usage or have been developed specially for eCommerce. In fact, many are offered by local banks and payment processing companies. There are many reasons a consumer would choose an AFOP over more traditional methods.
In many regions, credit card penetration is particularly low due to restrictions to obtaining a credit card, tight credit, or a consumer’s own security fears. Europeans tend to prefer online banking or bank transfers and parts of Asia and Africa don’t even offer common credit card schemes. In many parts of the world, the cash economy still reigns supreme. At the other end of the spectrum, some societies are going completely cashless and new AFOPs like e-wallets are becoming the norm.
Consumer Payment Preferences
With each new alternative form of payment that pops up, the focus is on these things with customers in mind:
Convenience: Today’s customers want a streamlined checkout experience without lots of forms.
Speed: It’s no secret that people have shorter attention spans, so nowadays, it’s all about doing things fast.
Security: Customers are hyper aware of the risks to their digital security.
Digital or Mobile: For people with a credit card or bank account, mobile and online payments are preferred.
International: Consumers expect to be able to buy products and services across international borders.
The 3 Most Popular AFOPs
When you think of alternative forms of payments, there are hundreds to choose from, ranging from using loyalty program points to cryptocurrencies. The 3 most-popular alternative payment methods that you should pay attention to are:
- Wallet-Based Solutions
- Mobile-based wallet for in-person transactions: In developing countries where a bank account or credit card may not be necessary to send or receive money, mobile wallets like Apple Pay or Google Pay are popular.
- Digital wallets or e-wallets for online payments: E-wallets, like PayPal or Alipay, store pre-loaded funds for transfers and payments (or they take funds from another payment method, such as a credit card).
- Online Banking: The customer approves an online bank transfer right through their financial institution; it’s real-time and debt-free.
- Prepaid Cards or Accounts: These cash-based options are loaded in advance and their spending limit is the balance on the card/in the account.
Check out these 11 popular payment companies.
Opportunities for Airlines
The most obvious benefit for airlines in the world of AFOPs is that more payment options means more sales! You’ll significantly decrease customer abandonment rates in the checkout process if you offer their favourite AFOP.
Besides this, your airline also has the chance to cater to local preferences as much as possible (payment method, language, currency, support, etc). By doing so with the right payment platform, your airline will be able to enter new international markets. You’ll finally reach that distant market your airline couldn’t break into, and generate trust and familiarity with the local consumers there.
Accepting as many AFOPs as possible through your payment platform will also better your relationship with agencies and partners, as travel agents want to accommodate their clients as much as possible. This is one reason why developing the right partnerships with OTAs and TMCs is so important for your airline.
Certain AFOPs offer clear advantages for airlines. Online banking is particularly promising as banks guarantee the funds, meaning you won’t have to deal with chargebacks. This also means quicker turn-around and fewer fraud claims.
Through the Accelya Payment Gateway, your airline can integrate with nearly every major AFOP worldwide, all from a single connection. You will improve your payment strategy with Accelya.
If you liked this post, read about airline payments trends to learn more. Also, download our ADAPT report below and discover the key components of a long-term payment strategy.