How airlines can navigate the payments landscape
Airline passengers want a seamless shopping experience and will leave if an airline fails to meet expectations – 10% of those who abandon a travel transaction cite payment issues as the cause.
Meeting customer payment needs adds additional costs and challenges to the complexity of airline operations. However, CellPoint Digital – a world leader in payment orchestration – helps airlines optimize their payment process, reduce costs and boost conversions.
Airport Technology spoke with Kristian Gjerding, CEO of CellPoint Digital, to learn where the payments landscape is heading, what airlines can do to keep up with the change, and how its payments orchestration platform can help.
Luke Christou: How is the payments landscape changing?
Kristian Gjerding: The payments landscape is changing very, very rapidly for a number of reasons. I will say that with the downturn in the economy – and undoubtedly fintech has been the hardest hit, it seems – we are seeing a downturn in general terms. However, the pace of change is still there and what would usually take five to eight years now takes two.
There are a lot of innovations going on and a lot of areas that still need to innovate. There’s a lot of agility in fintech to improve broken systems, user journeys, and disconnected environments, which is important as merchants realize that payments are a revenue multiplier. If you do it wrong, it will cost you a lot of opportunities and revenue and if you do it right, it will generate a very positive contribution to your bottom line.
We see innovation happening in a host of different areas, both in payment types and in how banks operate with new banking and open banking. We see cryptocurrencies coming, we see many alternative forms of payment. We see a whole range of abilities and a lot of interesting changes.
How is CellPoint Digital helping airlines navigate the changing payments landscape?
We are a fintech company focused on what we call payment orchestration, which actually manages the financial supply chain for our tour operators.
With a single connection with us, we give the merchant full control over their payment ecosystem. The airline can manage all aspects of the financial supply chain, from deploying payment methods across their digital sales channels – whether mobile, wearable or whatever you can imagine – to bringing multiple different payment sources worldwide. , or at least a large regional base. It combines all the components needed to optimize your payment ecosystem.
We really help our merchants in three areas with this solution. We give them the opportunity to increase their conversion rates by getting more payments made; we give them strategic flexibility, ie ease of use – manage the ecosystem and do more with less; and finally, we help them save on their payment fees.
We see an average of between 6% and 11% return flow. If you’re an airline and we have $1 billion in flow through our platform, we deliver between $60 million and $120 million back on that flow in positive contributions to your bottom line.
Why should payment orchestration be on airline radars?
Payments are becoming a revenue multiplier and I think merchants, especially airlines, are realizing that it contains huge opportunities to generate what we call bottom line contributing services.
Payment orchestration is really the next level where we move from gateway acquirers to full-service PSPs [payment service providers]and where we really give merchants full control of the ecosystem.
These are conversion increases, improvements or strategic advantages and cost reductions. Airlines should look at this as something their digital and revenue teams can deploy to increase their conversion rate across the board, and I think that’s really important.
Are airlines keeping pace with the payments market?
I think the airlines are responding very well right now. We are seeing a huge increase in airline business. We are seeing our flow volumes increase significantly, due to the return of travel but also due to the willingness of airlines to change. They have seen the consequences of having rigid systems during the pandemic and they know that if they want to conquer the market, they have a lot to do.
One of the areas where airlines definitely need to upgrade is in their payment capabilities. For them, the orchestration of payments is particularly useful because airlines have very complex systems and many legislations. They want to reduce their burden from a cost perspective, but also from a complexity perspective. And then they have to do more with fewer people – It’s not like they can just throw bodies at problems. They need to fix them in a smart way that allows them to do more.
As regional or global players, they have multi-acquirer configurations, sophisticated and complex products and a specific need for back-office improvement. Serving customers, whether in different parts of a particular region or globally, requires great adaptation to local needs and desires, so they must serve many different payment methods.
They also need to reconcile all those incoming payment transactions, they need to increase the acceptance rate. So there are many areas where payment orchestration significantly supports the transition to a more digitized reality.
Is it important that airlines offer a variety of payment options?
If you’re an airline and you don’t, you’re going to lose massively because there are a lot of people who prefer to pay with alternative payment methods. Buy Now Pay Later and similar types of financial instruments are essential in their ability to convert. Methods such as split payment, where a traveler can pay with multiple cards, are also essential. Moreover, you need options adapted to a particular market, because they are not the same alternative payment methods everywhere.
Merchants must have flexibility in their payment methods and they must have full control over them. They need to be able to deploy and retract them literally with the click of a button, which is one of the things payment orchestration does.
Will cryptocurrency play a role in the future of airline payments?
We don’t see much demand for cryptocurrencies in the airspace yet. That doesn’t mean it doesn’t have legs on it. I think you will see future generations desiring these types of currencies because they have many advantages in certain situations.
If we take next-gen, they’re already using NFTs in the gaming environment, and remember some of those people are 14, 15, or 16 years old. In a few years, they’ll become buyers of airline tickets and airline inventory, and they’ll be used to transacting in those environments, so that’s something they’ll eventually root for.
Right now there is a lot of volatility in cryptocurrencies. There are a lot of challenges around that. We see cryptocurrencies under pressure and they have lost a lot of value. This illustrates that there must be less volatility if these currencies come into play, because otherwise airlines suddenly become inventors instead of operating airlines, which is dangerous.
So I think we need to see some easing in those areas, but as a form of payment, cryptocurrencies will most definitely have an impact as we move forward over the next three to five years.
How does CellPoint Digital help airlines manage the growing number of payment options?
We have a very large ecosystem of alternative forms of payments, acquirers, gateways and other things that are readily available to our airline merchants. They have access to our console, so they don’t need to have their own environment, where they can configure and deploy payment methods for different markets based on a whole set of rules.
They can say “for a particular market, I want to display these payment methods”. For other markets, I would prefer these”. It’s really a sophisticated and optimized way to offer alternative payment methods based on a set of rules: geography, amounts and time of day.
And it makes it very easy for them to manage and then report back so they can see how they’re converting and how things are progressing. An analytics platform is built in, so you have access to real-time data, or you can go back and search historical data.