30th March, 2021
Travel merchants have dealt with several payment-related uncertainties over the past couple of years, looking at aspects related to concerns and expectations of travellers, the role of various stakeholders in the payment value chain and how to go about their top payment priorities.
The Covid19 pandemic posed critical questions that left travel companies with no option but to respond to the demanding situation.
For instance, few questions that needed to be answered were:
- Travellers’ nervousness: “I am willing to travel, but not too sure about the future. What if I book today and decide to cancel/ postpone my trip later?”
- Gearing up for worst-case scenarios: How to improve upon the refund process? How to automate the same? What is going to be the role of acquirer?
- Cost reduction: Other than cash flow and revenue generation, how to go about cost reduction? What are internal costs related to payments? How to bring down the cost of payment acceptance?
- How are the established payment rails coming along? Aspects like the role of traditional financial middleman, their competency etc. is being evaluated.
- Regulatory environment: Take the case of PSD2 in Europe. It has been the main catalyst for Open Banking in Europe, making this market much more regulatory-led.
Responding to new digital preferences
Airlines have to respond swiftly to the digitalization of banking and payments, and subtle changes in how consumers pay.
The payments ecosystem continues to diversify, so it’s not about supporting one method of payment over another. It’s about having the flexibility to deploy new payment methods when customers demand them.
In addition to this there have plenty of other factors, including some of them that even demanded attention prior to the onset of the pandemic, which called for diversification of the overall payment offering. For instance, low-cost airline Norwegian chose to focus on A2A payments (worked with Trustly) for several countries in Europe. It chose to take advantage of Open Banking, offering consumers an option to use online banking transfers to pay merchants. Also, as highlighted by Trustly, PSD2 has acted as a catalyst for this by requiring that all banks allow and support authorized third parties (called PISPs) to initiate payments. This continues to make bank transfers a much more widely available payment method across Europe.
With this initiative, Norwegian’s focus on improved CX along with other aspects like operational cost savings, the issue of chargebacks etc. have stood out. Also, a vital part of cross-border success for merchants is the ability to support payments in the customer’s currency and payment method of choice.
Other than the rapid deployment of new payment methods and improving CX, airlines are working on plans to automate back-end processes like settlement and reconciliation and incorporate fraud rules and regulatory compliance, all of which reduce chargebacks and fraud.
How are airlines and travel merchants looking at their payment priorities?
Attend not-to-be-missed #travelpayments #ATPS conference in London:
15-16 June 2022 (Live Event)
By Ritesh Gupta
Ai Team
