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Worldpay published the Global Payments Report 2017, which highlights a crucial industry trend: By 2021, credit cards in the Asia-Pacific (APAC) region will make up only 10 percent of transactions. However, bank transfers and eWallets - clubbed together as AFOPs - will make up close to 67 percent of all online transactions in the region.

What does this mean for airlines operating in APAC from a payments perspective? What should these airlines do to prepare themselves for this change? In this post, we’ll examine these questions.

Understanding AFOPs in the Region

The rise of AFOPs can be traced back to the rise of e-commerce in the region (China alone has the world’s largest individual e-commerce market). The nation has embraced e-wallets, which make up 62 percent of e-commerce payments. Specifically, Chinese customers have turned to Alipay, Tenpay, and WeChat Pay as their preferred e-wallets.

While China has the world’s largest e-commerce market, India has the fastest-growing. Leading e-wallet companies are MobiKwik, Paytm, and Snapdeal. More apps are now connected to the nation’s Unified Payments Interface, giving electronic payment access to more Indian users. Last year’s demonetization of common Indian rupee notes has further expedited the shift.

Of course, China and India aren’t alone in embracing AFOPs. Bank transfer is the most popular online payment form in Indonesia, making up 28 percent of e-commerce payments. Japan’s aging population hasn’t kept the nation from having the region’s second-largest e-commerce market. In 2016, Malaysia's government launched the National eCommerce Strategic Roadmap, which aims to double the nation’s e-commerce growth rate by 2020.

Fortunately, airlines can reap benefits from these payment shifts. AFOPs have the potential to directly impact passenger sales for airlines by expanding reach to new customers and driving incremental sales to existing customers in easier ways. On the cost side, the new forms of payment have the potential to significantly reduce cost and risk of accepting payments for the airline.

Preparing for Change

To make the most of the AFOP opportunity, airlines need to keep 5 things in mind:

  1. Alignment: Look at working with payment gateways and aggregators that align with airline’s strategic growth plans and expansion. According to the IATA, the best opportunities in the APAC region include Australia (Bpay, PayPal, and POLi), Japan (Konbinis and PayEasy), and South Korea (domestic cards and the Kakaotalk app).
  2. Scalability: Purchase and implement systems that can scale with front-end strategy. This means turning to systems that can support payment gateways in the APAC region.
  3. Control: Implement systems and processes that allow airlines to exercise control over receivables, control over the cost of receiving payments, and control over account postings in ERP.
  4. Flexibility: Work with vendors who are willing to work with airlines and help them adapt to the fast-changing payment ecosystem. Ideally, they should have familiarity with the APAC region and have experience integrating with the region’s popular apps, e-wallets, and other payment gateways.
  5. Reporting and Feedback: Look for systems that enable the airline to continually monitor their processes and take corrective measures based on performance. Only with accurate metrics can management make accurate strategy changes to maximize the opportunities in the APAC region.

A Profitable Opportunity

The payments ecosystem in the APAC region is the fastest evolving market in the world. The region is also where airlines are expected to record the highest passenger growth in the coming years.

Airlines that start working with the vision to capitalize on these two factors will significantly add to their bottom line. Furthermore, they can establish themselves as the airline-of-choice for new customers. The opportunity is there for the taking. Future APAC customers are waiting.

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