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4 airline payment trends that will be mainstream in 2020

The world of consumer payments is changing rapidly. We hear about new forms of payments every passing day – from voice assistants and QR codes to tapping phones using near field communications, and blockchain payments. The pace of change is exciting but the pressure to keep up with it can be equally challenging. This is especially true for the airline industry, given its complex payment infrastructure and lack of technology readiness.

That said, there are certain developments which have the potential to disrupt the business-as-usual of the airline payments industry and cannot be ignored or delayed. Let’s look at the trends that airlines need to be prepared for in the near future.

1) Customer experience will drive payments strategy

Enhancing the payment experience for air travelers is more of an ongoing work-in-progress initiative than a trend. Multiple studies and surveys have established that travelers are increasingly buying air tickets on their smartphones and expect a smartphone-friendly experience with a variety of payment methods available. But customer experience goes beyond offering a choice of payment options. The two most important attributes of a great payment experience are convenience and safety – any compromises in these areas mean airlines will face potential damages – either on top line or worse, on customer experience and relationships.

2) ‘Alternate’ will become mainstream

The terminology used within the payments industry addresses e-wallets and direct bank transfers as ‘alternate forms of payment’. This is because cards have been the primary payment method for more than 5 decades now. But with multiple forms of payments now mushrooming across the globe (especially in Asia-Pac), things are rapidly changing. We are already seeing local payment methods like AliPay and direct bank transfers becoming mainstream in certain markets pushing out credit and debit cards to second place. Airlines cannot afford to ignore this anymore and will need to ensure that relevant payment methods are available across all channels.

3) Strong Customer Authentication (SCA) will be here

Taking action about 3DS2.0 is crucial, and is going to be a challenge that airlines will need to grapple with. Several airlines have already started preparing for the disruption it is expected to cause to airline direct sales. At the same time, airlines need to evaluate if there are any approaches that could minimize its impact. For example: could there be pre-authorization for frequent flyers? Is there a possibility to white-list certain passengers?

4) Payment teams will get centralized

In a typical airline, payment processes are distributed across multiple talent pools within the airline. The team managing refunds and ticket failures may be a part of the customer service team whereas the one responsible for reconciling payments may be a part of revenue accounting. Each of these teams are performing their core tasks but without a single payments vision that ties them together. Because these teams are usually operating without collaborating with one another, it affects airlines negatively across both customer satisfaction and revenue leakage. To overcome these issues, airlines are now setting up centralized payments team that gives them greater visibility and control over their payments processes and reduces cost per transaction for the airline.

If you liked this post and want to learn more about airline payments, download our ADAPT report.

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