15th June, 2022
ATPS, London
By Ritesh Gupta
Airlines have been looking at various facets of B2B payments. These include evaluating risks associated, assessing the role of stakeholders across the value chain and working on a financially viable way out. The travel industry has also been trying to do away with legacy B2B payment processes. All of this while keeping an eye on travellers’ willingness to pay, digital innovation, regulatory changes and the entry of new players.
The going was smooth till March 2020 or so and there was no major driving force to revisit legacy payment approaches. But a lot has changed since then. Passengers now have varied considerations before they pay, and airlines are looking for partners from efficiency, transparency and automation perspective. In addition to areas like automated payment reconciliation, airlines are working on payment orchestration and applying business intelligence to the payment. Drifting away from the mind-set that labels payments as a cost is paving way for new initiatives.
As discussed during Ai Events’ webinars over the past two years, airlines have to be spot on with what a passenger values and prefers while making a payment. And at the same time, how to work best with agents, acquirers etc. to focus on a mechanism that lays a solid foundation, enabling stabilization, recovery and growth. This approach needs to be adopted by the entire travel value chain. Not just growth, but protection, too, is of essence.
Considering what has happened over the two years, some interesting developments:
- A bigger basket to choose from: For travel merchants, the choice of working with payment and technology specialists has widened. The payments ecosystem continues to diversify. Once the domain of a small number of deep-rooted financial entities, the B2B space is now filled with agile companies, looking into the entire payment chain from a new perspective. For instance, how to deliver fast, convenient payment options or ones that take care of uncertainty, e. g. pay when you are ready to fly or point of sale financing? Who is better equipped to cater to newer, digital-natives? Then there is routine stuff like friendly fraud, chargebacks, refunds etc. when agreeing on a crypto transaction and so on. Options for the B2B category include bank transfers, airline settlement plans, card payments, virtual cards etc. There are a series of factors to consider – cash flow, cost of a transaction, coverage, the sort of financial bonding involved, dispute and refund process, reconciliation, FX etc.
- Role of software: The role of payment orchestration in transaction routing, authorisation rates and the ability to roll out new payment methods quickly and seamlessly is being discussed regularly at our events. According to CellPoint Digital, payment orchestration allows airlines to unify all components of a transaction under a single control layer. For cross-border merchants like airlines, this means integrating the right mix of regional and global payment partners (PSPs, acquiring banks) to optimize acceptance rates and minimize cost. Also, an agile platform will also automate back-end processes like settlement and reconciliation and incorporate fraud rules and regulatory compliance, all of which reduce chargebacks and fraud.
- Data:Travel merchants can also be creative with their payment and fraud data to help other business functions. For instance, how to make the most of transactions-related data. It provides insights into both customer and merchant activity. Another benefit: fraud data can help in deriving better results from marketing campaigns. A company realized that TikTok was resulting in account fraud and as a result fraudsters exploited a promotion for free Amazon gift cards!
- Count on digital tools for operational efficiencies:Manual processes hinder movement of money throughout the travel value chain. The benefits of digital tools can’t be ignored.
It would be worth listening to every discussion at #ATPS in London (15-16 June).
