First Posted 17th February, 2021
Interview with Kristian Gjerding, CEO of CellPoint Digital
Travel merchants acknowledge the need to sharpen their payment strategy and look at various CX aspects. In addition to supporting the payment method and the currency shoppers prefer, an airline, hotel or OTA has to ensure a transaction take place without too much of a hassle, for instance, with relatively few tedious fraud checks.
“In 2021, travel merchants must be ready to handle more and more payment transactions via digital channels. They must be prepared to offer even more alternative payment methods, to support contactless payments and give more payment flexibility, such as installments, which more cautious returning travellers will want,” Kristian Gjerding, CEO of CellPoint Digital told Ai’s Ritesh Gupta in an interview.
“This means we will see increasing numbers of travel merchants switching to more efficient payment orchestration platforms that can optimize payments across all markets and channels, enabling them to optimize the conversion rate, to minimize average payment costs and to automate back-end finance processing such as reconciliation or management of chargeback disputes,” he added. “Right now, travel merchants should be urgently exploring payment orchestration solutions that will give them the ability to not only streamline and optimize their path to purchase but also adapt faster to the more volatile market conditions following the pandemic.”
Excerpts from Ai’s interview with Gjerding:
Ai: How can a travel merchant make the most of the digital opportunity to improve the payment experience?
Kristian Gjerding: Digital commerce has already made great improvements to the traveller’s payment experience. But there are still pinch points, frustrations and friction in the path to purchase, which impact the customer experience.
Travel merchants can use new generation payment platforms to eliminate these issues. They can offer the preferred payment method (global or local cards, digital wallet or cash based methods) for each customer, in each market, for each channel – providing mobile payment options to mobile users, for example. They can also optimize the routing of each card transaction so that the payment gets authorized, avoiding the frustration of payments not working because the PSP or acquirer drops it if the first option fails. Even better, merchants can roll-out single click payments across all channels with stored cards, streamlining the process for returning customers.
Ai: How can merchants capitalize on payment or transaction-related data even better to improve upon key performance metrics – cost, revenue and CX?
Kristian Gjerding: Great question! Payment and transaction-related data are vital resources to optimize the path to purchase in travel. When the digital back office is effectively integrated, there is great potential to leverage this data to boost performance across those key metrics. The first thing agile organisations can do is to optimize the fraud prevention process, by detecting fraudulent patterns faster and more accurately and by identifying trusted transactions which do not need the full screening process. Better data enables a better balance between fraud prevention and a smooth customer experience.
Integrated data can also assist the optimal routing of card transactions: real-time information on the current acceptance rates for specific PSP or acquirers and the costs associated with each route, enables selection of the best route for each payment. This makes a significant impact on improving acceptance rates (thus conversion) and reducing costs.
Finally, with the right data, the travel merchant can offer the most appropriate choice of payment method (cards, alternative payment methods) for individual customers, based on their profile, location and past transactions, including registered cards, vouchers, and the most relevant currency.
Ai: How can merchants look at issues internally to manage payments even better?
Kristian Gjerding: Numerous departments in a travel business are impacted by the payment solution: the e-commerce department wants to push conversion rates; payment and treasury needs to minimize fraud and reduce payment costs; the revenue accounting department has to manage reconciliation in the most efficient way; the IT department must esnure seamless operation of the payment solution across all channels and the commercial departments (including customer service) want to offer the most efficient payment experience to each and every customer maximizing revenues.
By far the easiest way to eradicate internal issues between departments is to have a single payment platfrom that powers all digital channels, process all transactions provides a 360 view of all data and streamlines/ automates the core back-end processes like fraud checks, reconciliation, chargeback etc., in line with business objectives that each department can set to support the overall strategy.
In short, the payment orchestration platfrom will also orchestrate the objectives between the various department of a travel merchant.
Ai: What is being done to ensure merchants better manage fraud and chargebacks?
Kristian Gjerding: New generation payment platforms provide enhanced data fields, to enable a far more accurate and detailed fraud screening process both pre- and post- authorization, with automation of fast corrective action when needed.
In the same way, the latest chargeback solution will automatically gather the relevant data to dispute chargeback requests, improving your win rate and reducing staff input and costs – this has proved essential during peaks of chargeback requests, such as during the Covid19 waves of 2020.
Ai: Moving payments behind the scenes is very complicated. How do you think the industry is working on the same so that expenditure incurred by merchants can come down?
Kristian Gjerding: Costs are high because of the insufficient competitive challenge that was built into the ‘traditional’ PSP/Acquirer model. So some international merchants, especially airlines, started to develop their own payment switch or orchestration platforms to manage multiple PSPs and acquirers, and to better control the roll-out of the new alternative payment methods they needed. However this in-house model requires significant capex investment and has proved to be neither cost effective nor sustainable over the long run, as integration costs are not shared with other merchants.
Current best practice is to implement a payment orchestration platform delivered in a SaaS model. This offers freedom from PSP and acquirer dependency, without incurring massive set-up costs. A payment orchestration platform can solve these issues. It delivers an evolutive payment platform connected to a fast-growing payment eco-system, paid for as a service. This increases the time to market, reduces the need for capex and also reduces the average payment cost.
Ai: What should travel merchants prioritize their revenue-related requirements, especially with certain segment travel for instance, cross-border trips, are going to open up gradually?
Kristian Gjerding: Reducing cross-border transactions (to reduce the average cost-per-payment) and increasing conversion rates with more “local payment transactions” should definitely be a top priority for international travel merchants. This requires travel merchants to deploy a multi-acquirer strategy and dynamic routing capabilities.
However there are other critical actions that travel merchants can take to boost their revenues if they have not yet done so: The first is to roll-out stored cards with single sign-on. Stored cards have a dramatic impact on conversion uplift, up to 20%, and offer best-in-class acceptance rates. The second is to offer currency exchange to international customers, with multi-currency pricing or dynamic currency conversion. This not only increases the conversion rate, enabling consumers to pay in their preferred currency, but also generates significant extra mark-up revenues for the travel merchant. A third initiative could be to offer installment payments to consumers. Paying over several months not only increases the conversion rate but also enables consumers to buy a higher “ticket value” – both have a positive impact on revenues.
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