The travel industry is on a “learning curve” when it comes to payment evolution, according to experts.
While advances in technology as well as payment mechanisms are helping remove friction for both consumers and businesses, there is still a long way to go.
Stephen Quinn, chief commercial officer of Fly Now Pay Later, a buy now pay later specialist (BNPL) and a veteran of the payments industry, believes that the world is moving on from just credit card payments to wider options.
“The learning curve comes down to trust and confidence to, not move away from cards, I think that will always be the basis of everything, but give people more choice and be able to localize payment experiences,” he said. “Every country has a different cultural approach to how they make payments. It’s that learning curve of what to offer, when to offer it and who to offer it to, which is something the retail industry went through years ago. Travel is going through that same curve now in terms of being able to offer that different experience for the consumer.”
Research from Amadeus-owned payments company Outpayce released today supports this and reveals that consumers want transparency and flexibility when it comes to payments.
A third of consumers are more likely to turn to buy now pay later mechanisms to fund travel in the next 12 months while 40% said they are more likely to use a credit card, 23% said a payday loan, 47% prepaid debit cards and 47% co-branded credit cards that enable consumers to earn loyalty points to be redeemed against travel.
Quinn was speaking at the Money 20/20 event in Europe in Amsterdam in June as part of a session entitled Fintech + Travel: An Unexpected Journey. He was joined by David Doctor, chief executive of Outpayce, and Anirudh Narla, head of product for payments and fraud at Hopper.
Doctor agreed that the industry is only beginning to scratch the surface when it comes to payments, which is one of the reasons Amadeus launched Outpayce earlier this year and applied for an e-money license.
Outpayce is building out a platform to help fintech startups and financial services providers access the travel world and the travel world access emerging payment and fintech innovations more easily.
Connecting the dots
“Travel payments is all about international,” Doctor said. “It’s cross-border and the end-to-end experience. There’s a lot of room for improving that, including the payment part of it.”
Doctor added that “we all just want a better experience,” and data plays a huge role not only when it comes to removing friction for travelers, for example when a payment is declined, but also for the wider travel industry and financial institutions.
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“It’s 2023, the card gets declined, they [card providers] should know I’m traveling, that’s a data problem. It’s about data flow. What we focus on as a B2B player is make sure that data is complete. We use all the different data sources and feed that through to where those transactions are happening, to get better acceptance rates.
“You can also use data to improve the experience if you pass the data, with permission from the consumer, down the travel chain, from one party to another.”
He cited a further instance where data can help smooth current processes, which is in helping acquirers manage risk.
“A big challenge today, particularly for airlines, is that acquirers are hesitant to go into that area and the problem is having enough data to manage the risk,” Doctor said.
Outpayce, he said, is building out data sets and “enriching the data with everything we pick up and working with some banks to feed them those data sets so they can manage the risk better.”
“The issue with risk and building trust is what you don’t know. One thing we have enough information about is what is happening with an airline’s operation and feeding that in real time so they can work out whether there could be failure of delivery of service. Disruption is not a problem necessarily with just one airline, but it could affect one more than another, and you need to have the data to work that out, then you work out the risk.”
Panelists also agreed that when it comes to payments an experience akin to what Uber provides is the ultimate goal. Hopper’s Narla, who previously worked for Uber and has said that payments should “be invisible,” said: “We’ve all come to expect an experience like Uber pioneered, you don’t even have to think about it, and that’s what we have all been gearing up towards.”
But with so many developments in travel payments currently, how quickly might the industry make progress?
Quinn, who believes that in a year’s time the industry will be having similar discussions, said: “It’s still at such an early stage, and the journey is a long one, so I think we will still be on a similar trajectory.”
Narla, meanwhile, concluded that Apple is a company to watch with its developments in augmented reality as well as Apple Pay and how its ecosystem might impact travel.
