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Innovations in travel – airline payments

Air travel can be stressful to both fliers and staff. Fliers race to make connecting flights or finalize payments on vacation, while staff are caught up with overwhelming queues, not mentioning monitoring and preventing fraud in a small period of time with a big amount of fliers.

Anything that can remove frictions — including making payments easier — can make a big difference.  In the midst of digitalization era, the travel industry have been working with third-party payment service providers (PSPs) to revolutionize their payment solutions and deliver a more seamless method. They take outside talent with greater expertise, but hiring and handling such firms impedes many travel companies’ from fostering the innovation initiatives necessary to maintain in the competitive space.

As costly as hiring third-party payment service providers can be, building an in-house payments system represents even more expense and responsibility. That said, the global travel industry knows it must innovate to win over customers. Travel companies understand that being innovative means managing a complex, multi-channel and international system. They are also well aware of that they must protect customers from fraudsters whose methods grow more sophisticated by the second.

  • Travel companies give the main factors behind payments innovation drivers
  • internal operational stress
  • customers’ suggestions
  •  employees’ suggestions
  • competitors’ innovations.

Finally, 36% of travel companies believe payments innovations will decrease their costs.

Why innovation measures run into problems? At 78%, consumer data security is one of the biggest inhibitors to payments innovation. Following that was credit card data security imperatives, at 74%, which were listed as either “very” or “extremely” impeding. Incurred fraud losses came third.

Another problem companies encounter is abiding by consumer protection laws while developing innovative payment methods. “It is important to take a step back and realize that consumer protection laws are not logistical variables, per se, but rather legal and operational imperatives. They also increase the value of a company’s services in the eyes of the customer, a fundamental facet of a travel company’s business model.”

In-flight payments take off

Flight attendants also need better ways to accept flight payments, a need coming into focus under a recent Air Serbia initiative. The airline tapped U.K.-based mPOS provider ECR Retail Systems for its AirPoS solution, which aims to help airline staff sell food and other items to passengers at their seats. The devices accept payments via credit card, debit card and mobile wallets like Apple Pay and Google Wallet, and include a 2-D scanner, Wi-Fi 4G, Bluetooth connectivity and a silent printer. AirPOS is being installed in 20 aircrafts, according to a press release.

ECR CEO Simon Pont noted that airline retail can be complex, and serving the industry’s needs means “enabling payments at any time of day, while in transit, and accommodating  various currencies, tax rates, personnel changes and technology systems.”

Another solution was made by FlySafair, which received a soft launch in late 2017. These developments show that airlines are betting on mPOS to remove payment pains. Originally, FlySafair’s in-flight food sales were cash only, but customer demand spurred the airline to adopt new tech, allowing passengers to make payments via card.

Easing fraud pains

Eliminating inefficiencies and unnecessary foreign currency exchange fees aren’t the only hurdles to payments. One of the biggest hurdles is fraud. According to research from the European Union’s Europol law enforcement agency, the airline industry loses nearly $1.3 billion annually as a result of online card-not-present (CNP) fraud alone. Part of the reason for this cybercrime push is the wide range of rules and regulations, with which it can be difficult for travel companies to comply. What’s more, fraudsters are becoming more sophisticated and capable at hiding their identities from security teams and law enforcement.

Andreas Pousette, director of financial IT for Etraveli said “On the consumer payment side, I’d say that fraud is the biggest trend.“ He added: “We’ve seen that some of these fraud groups are very good at hiding themselves, coming from different countries and markets and finding new ways to commit fraud.”

Etraveli as well as other similar companies are working with industry partners and security providers to combat this reality. The goal is to combine fraud-fighting efforts with customer data to better detect fraudulent purchases before they happen. These partnerships will likely be important going forward, too — not just when it comes to dealing with FX fees or cybercrime, but in all aspects of the travel payments space. After all, the world keeps getting smaller, and, companies will be forced to eradicate inefficiencies, fight fraud and, ultimately, find success.

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