Airlines are focused on innovating their mobile payment offerings to capture anticipated revenue potential, according to the Alternative Payment and Distribution Landscape: Airlines and Alternatives – The Facts whitepaper, launched by WorldPay, a leader in airline settlements and payments.
The whitepaper, based on a research study of 56 global airline carriers – from low cost to traditional – found that mobile payments (payments for transactions made on a mobile device) are now a key area of focus for airlines: 57 per cent of airlines said mobile has the greatest potential to drive revenue over the next two years – equal to credit cards (57 per cent).
The acceptance of mobile payments has already grown to 25 per cent in 2013, an increase from 10 per cent in 2012.
Chris Chandler, vice president, financial services, Emirates Airline, said, “We currently accept payment through mobile devices through the mobile version of the website, and plan to accept all payment types on all devices in the future.”
The research also explored the alternative payment landscape for airlines and the biggest drivers for adoption of alternative payment schemes. Meeting customer demand and offering choice was the top reason (89 per cent), followed by the cost savings that can be made by customers using alternative payment methods instead of credit cards (64 per cent).
Key findings from the alternative payment and distribution landscape whitepaper include:
Payment options – in 2013, credit cards (96 per cent), charge cards (86 per cent), debit cards (64 per cent), air miles/loyalty points (54 per cent) and e-wallets (38 per cent) were the top payment methods accepted by airlines.
Future of payment – a third (32 per cent) of airlines are planning to offer mobile payments in the next two years, with e-wallets (29 per cent) and online bank transfers (29 per cent) also on the development radar.
Benefits of multiple payment methods – providing the ability to reach new customer segments (63 per cent), lower payment processing fees (61 per cent) and lower fraud rates (50 per cent) were cited as the top three benefits of offering a range of payment options online.
Incentives offered – 86 per cent of airlines in 2013 offered discounts or rewards for customers using alternative payment methods to credit cards; an increase from 55 per cent in 2012.
Mike Parkinson, vice president, airlines, WorldPay, said, “Airlines have recognised the revenue opportunities of mobile, and are now focused on improving their mobile offering. Over the next two years we can expect to see significant developments in this space, with new innovations in the ways consumers purchase tickets and services via mobile devices from airlines. In the future, services offered via a mobile device will become inherent to the airline experience from booking to check-in.”
The biggest challenge for airlines implementing alternative payment methods without external assistance is the lack of integration with current systems and processes, followed by the cost of implementation (39 per cent).
Maarten Rooijers, senior manager e-payments, KLM, said, “Direct integration with a payment type is too complex both from an IT aspect as well as from an accounting and reconciliation perspective. The complexity increases if you, as an airline, want to implement more alternative payment options. Therefore we work with expert payment service providers to manage this connection on our behalf.”
However, 88 per cent of airlines believe enabling alternative payment methods is critical for revenue growth.
