New forms of payment technology is of significant priority to global airlines, reveals a study.
WorldPay has released the third part of a report outlining some of the emerging payments systems coming on-stream to the aviation industry (the previous two reports are covered here).
The increase in airline distribution channels has led to the increase in payment options and its complex requirements, the report says.
The study of 68 traditional and low cost global airlines brings out various alternate payment options, importance levels perceived by airlines, trends, and the challenges associated with it.
Mobile payments - trends, opportunities
Customer demand, industry competition and increased revenue are driving mobile airline payments.
These payment options not only benefit passengers but also improve airline's internal processes such as data submission and handling.
Over the next two years, airlines will use mobile services to offer more ancillary purchases.
While 50% of airlines see mobile payments as a way to keep up with competitors, 45% of airlines see mobile payments as a way to increase revenues.
Below graph shows the various services offered (current and future) via mobile channel:
Challenges of mobile payments
Challenges seen by airlines in mobile payments are:
- The risk of fraud: Due to the security softwares installed on customers' mobile, it becomes difficult to determine if they are the legitimate owner of the account linked to their chosen payment method.
- Integration: Legacy systems implemented before the availability of mobile payments may not support new payment platforms.
- Mobile platform diversity: Customers might experience a different user experience (depending on their mobile model) due to varying mobile operating systems.
Below graph has more details about mobile payment challenges:
Payments via social media
While social media channels like Twitter emerge as a virtual concierge service, 29% of airlines plan to enable sales through social media channels.
Also, 40% of airlines have plans to be active on Google+ in the next 12 months.
Recently, KLM rolled out a feature that allows a user to pay via social media channels.
Challenges of social media payments
The airlines see social media as a relatively new sales channel and hence a lack of experience is cited as a challenge.
Other challenges include - the need for a large team to manage the social media presence, integration with existing systems, and lack of clarity on ROI.
On-board payments
With the availability of in-flight connectivity services and the increased demand for it, airlines are expanding their payment options on board.
Cards are still the most popular on board payment option, followed by frequent flyer and loyalty points.
Other mode of payments on board include E-wallets (18% of airlines plan to accept them in the near future), and mobile payments (5% airlines currently accepts).
Self-service kiosks
Investment by airlines in self-service kiosks is set to reduce over the next two years due to the increased adoption of mobile among travellers. However, many airlines still plan to implement additional services (42% plan to sell upgrades via kiosks in the next two years) at kiosks, including check-in and seat reservation facility.
Currently, 29% of airlines are investing in mobile payments while only 17% are investing in kiosks.
Challenges in self-service kiosks payments include the cost to implement and maintain them, and integrating with current processes.
Study methodology
WorldPay conducted the study in May-July 2013 and covered 68 traditional and low cost global airline carriers. 34% of the surveyed airlines are headquartered in Europe, 22% in Asia Pacific, 21% in North America, 13% in the Middle East and Africa, and 10% Latin America.
NB: Airplane image via Shutterstock.