17th November, 2021
Airlines need to support payment methods that customers are not only used to paying with, but also ones that enables them to be in control. Look at aspects like flexibility, contactless payment options, not letting passengers feel “over-committed” as they book, when to pay etc. going forward.
Surge of BNPL
The surge in buy now pay later (BNPL) option for transactions has stood out in the recent past, and travel companies, like retailers from other categories, have already responded by activating flexible payment feature on their digital assets.
Referring to the BNPL option in the travel industry during Ai’s #ATPS today, Uplift’s Michelle Byerley said the option to pay in instalments stands out for its “simplicity and flexibility”. “It allows consumers to take control of their budget, to reduce stress for large purchases at once and reduces financial stress (allows to pay over time). “
Also, coming out of the pandemic, it helps in planning a trip. With transparency and related aspects like no late fees, no confusing maths, and knowing exactly how much to pay, it is fuelling such buys. “BNPL helps in booking travel early in the purchase cycle. For some, lets them plan a trip (rather than wondering whether one can afford or not, now they are asking – how they can afford it) and for some, even the option to upgrade or buy ancillary purchases, making travel even more comfortable,” added Byerley.
It helps airlines in segmenting business and leisure travel, and target specific customer segments (drive demand and conversion), avoid discounting (maintain price structure for a longer period, result in higher yield, load factors, average order value), inventory management etc. According to Uplift, monthly instalment payments have been driving what is seemingly quite an “aggressive” recovery in the travel industry.
Reasons behind accepting alternative form of payments (AFPs)
The top reason behind airlines opting to accept AFPs is lower merchant fees, according to Edgar, Dunn & Company’s research. This is owing to the fact that net profit margins are typically low in this sector.
Speaking about the same at Ai’s #ATPS today, Edgar, Dunn & Company’s Gregoire Toussaint cited customer demand as another main reason for accepting AFPs. He said the third reason is “no chargeback/ fraud risk”. “It is important for airlines to accept AFPs that limit or completely avoid any fraud risk and that avoid chargebacks that generate manual work,” he said.
Majority of airlines are in the process of evaluating or piloting new wallets. At the same time, they acknowledge that not all wallets will be successful even if they are launched by leading brands, and are especially interested in implementing instalment options and/or real-time bank transfer options.
Post Toussaint’s presentation, a session on driving adoption of emerging payments was held. It featured:
– Olli Kallioinen, LoyaltyPays International
– Seth S. Friedman, CITCON
– Michelle Byerley, Uplift Inc.
– Merrick Theobald, BitPay
A travel shopper wishes to pay via a cryptocurrency, how to cater to such shopper? Bitpay’s Theobald, asserted that when merchants opt for crypto acceptance, they don’t “touch the crypto”. Other highlights include no price risk, no chargebacks, next day ACH and the company charges 1% fee.
Friedman highlighted the ease with which travel merchants can now accept alternative form of payments, similar to the way they process traditional credit card payments. The company not only facilitates digital wallet brands (PayPal, AliPay, WeChatPay etc.) but also buy now pay later services, cryptocurrency etc.
The session also included Maarten Rooijers and Robson M. Rodrigues, UATP.
By Ritesh Gupta
Ai Team
